Given the recent renewed interest in the wireless sector with the upcoming Chinese wireless IPO of Linktone (Nasdaq: LTON) to debut this week, we saw a great opportunity in returning to one of our past portfolio stock picks: 724 Solutions Inc. (NASDAQ: SVNX) Currently there has been an extreme amount of momentum in the sector given the success of such companies as Research in Motion (Nasdaq: RIMM) given their success in capitalizing on the fast adoption of 3G wireless. We feel that SVNX offers tremendous value in the wireless servicing arena and has been trading at a large discount to its peers competing in the same space.

Rationale

724 Solutions Inc. (NASDAQ: SVNX) has been lagging the general market and has pulled back significantly from its recent highs in the $4 range. Recently traders have been feverishly buying up companies in the NASDAQ small cap markets, looking for companies that may be take over targets. We feel given the company’s large cash position of nearly $3/share and its innovative product line, make SVNX a very tempting take over target. However, in spite of this we feel that the company is seriously undervalued trading at only pennies above cash value.

The upcoming wireless IPO’s such as Linktone will have investors searching for similar companies in the same space. Linktone is a provider of wireless content and, allowing users to order accessories, play games, and subscribe to information services directly from their handsets. SVNX has the technology that enables companies such as Linktone to serve these markets. It just happens that SVNX is set to capitalize in the foreign markets given their partnerships with such companies as ZTE Corporation. ZTE Corporation is China's largest listed telecommunications equipment provider. Thus given their position in the Chinese markets and stimulus in the wireless sector, SVNX is that could prove to provide immediate gains in share value.

Finally, in the coming weeks SVNX is set to present at the upcoming CTIA Wireless 2004 conference from March 22-24, 2004. CTIA WIRELESS 2004 is the largest, most comprehensive show in the wireless industry. This would be the perfect opportunity for management to highlight its XML based products and issue any press about its growing customer relationships. Thus, there is the chance that this conference will bring us news.

Company Profile:

724 Solutions Inc. is a leading global provider of Internet infrastructure software, which delivers secure mobile transactions across a wide range of Internet-enabled devices. The 724 Solutions suite of products and services enables companies to build, deploy, and integrate personalized and secure mobile commerce (m-commerce) and lifestyle applications that are essential to the monetization of the mobile Internet.

724 Solutions Inc. offers reliable, scalable technology and solutions for mobile network operators and financial institutions. SVNX has been forgotten in the recent NASDAQ rebound primarily due to a 10:1 reverse split that occurred back in May. At that time the company’s stock traded for .40/share and to maintain a NASDAQ listing the company decided to do a reverse split in which each shareholder received 1 share of stock for every 10 shares they held at the new price of $4/share. Since that time the stock price has trended down below $3 setting a new all time low for the stock. This has become the perfect buying opportunity and a solid bottom for the stock.

Technicals: