Violeta Slavtchevska

Zix Corporation (NASDAQ:ZIXI) Emerges Straight to a New High

by Violeta Slavtchevska August 31, 2010
Zix Corporation (NASDAQ:ZIXI, ZIXI message board) stock made a puzzling jump up yesterday. On no news from the company since the second quarter earnings release, the stock saw also a record volume for the past six months.ZIXI.png

It seems that even the stock promoters did not expect that ZIXI shares may all of a sudden emerge from their undecided and slow decline and reach a new 52-week high within a single trading session. But that is what happened yesterday and as the volume alerts were sent yesterday evening, the volume seems like it could go even higher.

ZIXI's new highest value for the past year is $2.78 and the last trade yesterday was slightly below, at $2.76. As already mentioned, a volume of over two million shares has also not been seen recently and meant extremely high interest for the stock with an average volume of 380,000 shares.

Second quarter financial results were filed more than three weeks ago, but the the unexpected surging up in four consecutive trading session seems rather puzzling. Investors could have needed the time to appreciate the positive financial results, or just some big news to justify the sudden optimistic mood are still to become public.

Zix Corporation provides Internet-based software applications and still has two operating segments: Email Encryption Service and e-Prescribing. Though, as the second one of these units has not been running well enough, the company decided to wind down its operations by the end of this year.Zix_Corporation.jpg

And focusing on the growing segment has been a good decision. Due to the cost savings, the company became profitable during the first half of this year and expects a total growth of 25% from the remaining business for the entire 2010. Cash position is also improved, but what encourages investors' positive attitude is also that Zix keeps the same investment rates in order to expand the current customer base.

Thus, thanks to the now positive cash flow from operations, management does not expect to raise additional equity capital soon, but certain dilution risks are still there. At the end of this June, Zix had nearly 17.7 stock options and warrants outstanding, which represents substantial risk as there are currently 64 million common shares outstanding.

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