MagicJack Shares Climb as Economy Pushes Calls to Web: Israel Overnight
By Leon Lazaroff and Zachary Tracer - Sun Mar 11 21:00:00 GMT 2012
MagicJack VocalTec Ltd. (CALL), a pioneer of phone call-over-Internet technology, climbed the most among Israeli stocks traded in the U.S. last week on prospects demand for cheaper calls will spur the company to report its first profit this year.
Netanya, Israel-based MagicJack added 9.2 percent in U.S. trading last week to $24, bringing its advance for the year to 76 percent, the best performance of the 25 stocks on the Bloomberg Israel-US 25 Index (ISRA25BN) of the most-traded Israel companies in New York. The measure added 0.8 percent on March 9 to 85.41, trimming its decline in the week to 0.3 percent.
MagicJack, which reports audited fourth-quarter results this week, will turn a first profit of as much as $27.8 million in 2012, according to analyst estimates collected by Bloomberg. With the U.S. economy growing less than 2 percent in the past three quarters, consumers are cutting costs by using cheaper Internet calling offered by MagicJack and Microsoft Corp.s Skype Technologies SA, according to Eagle Global Advisors LLC.
People, especially in a tough economic environment, look for ways to reduce their expenditures, and companies like MagicJack and Skype are those types of companies that attract users due to their low costs, said John Gualy, a partner at Eagle Global Advisors in Houston and portfolio manager for the Timothy Plan Israel Common Values Fund (TPAIX). Theyre going from losing money last year to starting to generate good cash flow this year.
Gualys fund owned 11,500 shares in MagicJack at the end of 2011. He said the Israel Common Values Fund manages around $9 million.
MagicJack shares still have room to climb and are undervalued given the companys potential to grow revenue by as much as 30 percent this year, Chief Executive Officer Dan Borislow said in an interview on March 9. He said the companys MagicJack Plus device, which lets users make and receive calls over the Internet without turning on a computer, will help attract more customers.
In the United States, people are used to using telephones, and unlike Skype we enable the use of a telephone, he said by phone from West Palm Beach, Florida. Really anyone who has high speed Internet access, we have something to sell or provide those people.
The company, whose TV ads featured U.S. womens soccer player and Olympic gold medalist Abby Wambach, will file audited 2011 results on March 14 or 15, Borislow said. The net loss in the fourth quarter of 2011 is expected to be 9 cents a share on sales of $29.6 million, the company said in a Feb. 16 statement. The figures exclude one-time gains and charges as well as other adjustments.
We dont expect anything different at all from what weve already put out, Borislow said.
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MagicJack Shares Climb as Economy Pushes Calls to Web: Israel Overnight