HotThoughts: GXI-TSXV; RC-TSX

This morning GXI announced another contract with a U.S. major. Based on its preview of Q4 results published on January 22nd, one could suppose that its passenger trips under contract likely increases from 703 million to close to 770 million and its backlog increases from 250 million to close to 320 million. If this contract includes minimum transaction guarantees, investors should see a notable step up in month run-rates sometime near the end of the second quarter. Company has about 6 million in cash, and should begin generating earnings by mid-year.

RDM Corp reported its Q1 2009 quarter, which was flat from Q1 2008 at $7.1 million. It lost $0.08 per share compared to $0.00 EPS in the previous quarter due primarily to losses on forward FX contracts. However, its cash position was virtually unchanged from Q4 2008 with $17.3 million in cash. Excellent growth in its payment processing business was offset by continued weakness in its device business. With a market cap of $16.6 million, and no debt, it is trading at a negative enterprise value. RDM Corp is one of those microcap tech Companies that could use its balance sheet to make accretive acquistions in the payment processing industry. (see the Feb 3 post). Management could also get really bold and jettison its device business. Clearly, investors don't seem to value it.

I do not own shares of either Company.

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