GXI
Yesterday, the Company announced that American Airlines (AMR-NYSE) has adopted cashless in-flight retailing using the GXI Virtual Store Platform. This is important for Guestlogix for three reasons:
> Entrenches the platform for possible future transaction growth in areas beyond food and beverages including entertainment and destination-based services.
> This defacto standardization on its platform by American Airlines helps Guestlogix' negotiating position as AMR (its oldest client) renews its contract sometime later this year.
> Increases referenceability as a major client appears make the GXI system more integral to its core services.
The elimination of cash handling could reduce costs for GXI in providing the service. With most of the major airlines in North America adopting the GXI solution, and with the impending AMR renewal more likely, GXI has a lock on the North American airline industry. With the recently announced contract with an unnamed major airline, the Company has penetration in the North American industry possibly over 80%. It still has some short-term deployment challenges as the Company attempts to clean up a backlog of over 300 million passenger trips, however heading out of this recession, GXI is well positioned for strong growth in sales and earnings. Prior to this recession, an announcement like this would result in upgrades by analysts. There are already big targets on the stock relative to most other micro-caps, so this announcement may make analysts more comfortable that the Company could hit performance forecasts, with consensus forecasts more than a double over 2008 performance. Currently, liquidity is an issue with this stock, but investors should be pleased with progress.
RIM
No investor should be surprised by the lacklustre data coming from RIM this morning. As stated in previous posts, and supported by weak mobile device numbers from Nokia (NOK-NYSE) and Apple (APPL-NASDAQ) among others, RIM is not immune to the marked decline in mobile device upgrades during the 4th quarter. Consumers are simply delaying device upgrades as the economic situation deteriorates. As mentioned in the same previous posts, mobile subscriptions should be considered an essential consumer service. However, many could be converting subscriptions to lower cost pre-paid plans over the next few months as household budgets become tighter. The stock should take a hit today, although it likely remains a very good long-term stock to own.
I do not own shares in the Companies mentioned in this post.
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