Zix Corp (NASDAQ:ZIXI)

1. Zix itself says that revenues will decrease this quarter for the first time in history.

2. Zixi P/E at 28 is twice the S&P 500 average

3. Zixi will have to pay unknown royalties going forward in a recent patent settlement. As it was, zixi profits was only .01 per share last quarter

4. Zixi profits rapidly dropping compared to last year

5. Zixi is locked into OEM agreements with industry giants, who can squeeze them anytime they want

6. Email encryption is so dated. It's been around for 20 years, is free on MS outlook and dozens of other systems. All google email accesses are automatically encrypted via https. Demand is dying.

Good growth at reasonable price.

High renewal rate with customers. Email is becoming more frequent and at the same time people are starting to be more wary (NSA) of their internet security. Zix Corp stands to capitalize on this combination through their secure email encryption software.

Momentum continues to build

It goes up and down , at the bottom since ZIX is still making money with very little debt, I suspect that this company will outperform the S&P 500. That opinion is determined since the 500 is at the top of cycle of earnings whereas ZIX might be in a low cycle of its services and therefore could be better with any increase in its own earnings of over 99% annualized over 5 years.

ZIXI is undervalued and has a lot of potential to grow. Right now isn't the greatest time to buy due to recent spikes, but if it hits a support level around 3 bucks I might pick this up in my actual portfolio

With a PEG of only 0.4 this has a lot better chance of positive earnings surprises than negative ones.

Zix had a terrible 2Q.

By their own admissions, revs were flat from 2011 and are not expected to grow in the next quarter.

Revenues were flat from 1Q to 2Q.

IMF

Look for the 2Q revenues.

I expect them to be nearly flat. This has been the trend for the past year. It's no surprise that zix founder and board member, Cook resigned last year and sold all of his stock.
Since then the stock has gone down from $4.75 to its current value.

Zix's Total Orders, up a imperceptible 1 % from last year.

Revenue growth is a sluggard 11%, down from 30% just a few years ago. Market place is clearly drying up.

In 10Q zix used to say that they were THE leader in email encryption. Now they simply say they are A leader.

Today the US Patent Office confirmed that they will issue RPost with a certificate of reexamination. Rpost is suing zix for patent infringement. Rpost wants zix to cease and desist from using its invention.
From what I can tell Rpost's invention involves authenticating an encrypted email message using time stamps etc.
Seems like this is what zixmail does.
This is the basic problem with zix - they only have essentially a single product line - encrypted email.
If this is vulnerable, they are dust.

Wouldn't be surprised to see zix go under by this time next year.

The Rpost patent lawsuit case against zix is moving ahead and it looks really serious. Zix hired one of the most expensive and prestigious firms in the US, yet refuses to acknowledge the serious of the suit to its shareholders.
The US patent office has agreed to re-certify the Rpost patent with minor changes. A Northern California judge has already ruled that the Rpost patent is valid.
Rpost is asking that zix stop using its patent. Since zix has only one product, they may have to close up shop, or pay dearly.

Zix could be out of business in a year. The stock will soon tank. It is already down a third from last year due to stagnant revenues.

Looks like the Rpost patent being asserted against zix will be certified by the patent office with a minor clarification of the claim language.
The minor clarification seems to fit zixmail to a tee.

Look for panic when the first Rpost case goes to court in June.

Zix may not be around much longer.

Just got a court ruling that says that the Rpost patent against zix is valid
http://production.broadcastnewsroom.com/article/RPost-Patents-Validated-by-California-Federal-Court--1839459

Rpost wants them to cease using its technology, but without this techology zix will go under in less than a year. Zix needs the time stamping authentication to comply with HIPPAA regulations.

No insider has bought zixi stock in 2 years!

David Cook, founder, former CEO and board member quit in Jan after hearing about Rpost lawsuit. Sold all of his shares. Stock has plummeted since.

I expect to see negative revenue growth in this quarter. I also expect that the RPost reexam will re-affirm Rpost's patents and that zix will not be allowed to do sender authentication and time stamping. This will drive them out of business since they only have one product.

I look to early next year to be the point where the stock will really flounder.

Zix is an amazing company. When I came across it, I figured it was another company. But no, Zix had the biggest interest coverage ratio I'd ever seen. That sparked my interest. Zix also has the advantage of being older than their main competitor Trend Micro. I like Zix a lot, and I intend to hold on to it for a while.

Finally, the Fool gets it!

Two negative articles.

Not surprising. Virtually no growth this year.
Year to year growth is deceptive - zix omits e-prescribe revenue last year which they shut down at year end.
Zix has deliberately omitted to tell its shareholders about serious patent suit brought about by Rpost, a competitor who wants to shut it down.
New first year orders down by 25%.
In earnings call, zix admittted SYMANTEC is serious competitor. (SYMANTEC bought PGP last year and is eating into new zix orders).
No buys by insiders for 2 years.
Zix founder, David Cook quit board in January and sold all of his stock.
This is a no-brainer.