Here are some thoughts on the question I posed last week, "What do you want to see before you believe Racom has turned the corner and is headed back up?"
The hub nexus to turning Racom around was mentioned in the CEO's Sep 11 letter. He referred to it as, "get a consistent product revenue flow started". I call it developing a "revenue stream". Anyway, everything revolves around generating sales. The question now becomes, how to do this? (Note: contrary to some, buying 200K shrs doesn't generate sales #reply-5775459, thus it does not fit into the scheme of things).
Capture of strong partners and strategic alliances will be key developing a sustainable revenue stream. The CEO's letter did not dwell on this, but the Otis announcement #reply-5801008 indicates developing partners is on their agenda.
These partnerships are important because they provide greater margins than just selling smartcards, which is what most of us think about when we consider Racom; i.e., a million cards here, a million there. The CEO's letter mentioned Racom's intent to "provide high-value hardware, application software and services", and the Otis partnership goes to the heart of this statement. A statement which many have erroneously discounted.
To make a long story short, Racom will have turned around once a sustainable revenue stream delivers positive quarterly earnings. It will take partnerships with companies like Otis, who have a long client list that can be worked for sequential sales over a number of years, to reach that goal.
I am not ready to say that Racom has turned the corner, but I do submit Racom has taken a step in that direction and merits watching for other developments.
For those of you who want a simple fail safe sign, I suggest you wait for Verifone to take an equity position in Racom but by then price will be higher than what you want to pay. That's life! |
