I've never been terribly impressed by email encryption expert Zix (Nasdaq: ZIXI). It's a micro-cap business in a market full of dancing elephants. Many of Zix's rivals have been bought out in recent months, but the stock is getting a wee bit expensive for that exit strategy, besides the fact that Cisco Systems (Nasdaq: CSCO), EMC (NYSE: EMC), and even dark horse Intel (Nasdaq: INTC) already got their fill of small security experts.

But Zix is making some very smart moves these days:

  • The company has extracted itself from its money-losing electronic prescriptions service and now reports its remains as a discontinued operation.
  • Government requirements for secure communications play right into Zix's hands.
  • Most importantly, the company is learning how to get some help from its friends.

To that third point, a growing network of third-party resellers of Zix services now contribute 53% of the fourth quarter's new business, up from just 33% in 2009. Google (Nasdaq: GOOG) landed more than 10% of those new sales all by itself as part of its larger push into enterprise-class cloud services. Symantec (Nasdaq: SYMC) subsidiary MessageLabs also plays an important role, and Zix has a total of 106 resellers across the country. Their contribution to revenue doubled year over year while total sales from continuing operations grew far slower at 25%.

The stock is still on the pricey side, and I'm not convinced that Zix deserves that kind of premium, but the company may prove me wrong if its third-party sales efforts continue to bear this kind of tasty fruit.

Interested in more info and analysis on Zix? Add the stock to your Foolish watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Google and Intel are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers choice. The Fool has created a bull call spread position on Cisco Systems. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended a diagonal call position on Intel. The Fool owns shares of EMC and Google. Motley Fool Alpha owns shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.