Author Topic: CALL - MagicJack VocalTec Ltd  (Read 17635 times)

sleepydragon

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CALL - MagicJack VocalTec Ltd
« on: July 07, 2014, 06:10:37 PM »
Initiated a position in CALL today :)
The company is based in Israel.  Mktcap is $250mn, with about $60m of cash and no debt. trading at around 7x operating cash flow. Very high short interest. Recent high is $24. now trading at $13.

seems to me this company will be bought sooner or later by google/msft like big tech companies?
« Last Edit: December 14, 2014, 09:11:23 PM by Parsad »


PatientCheetah

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Re: CALL - magicJack VocalTec Ltd
« Reply #1 on: July 07, 2014, 06:26:36 PM »
Initiated a position in CALL today :)
The company is based in Israel.  Mktcap is $250mn, with about $60m of cash and no debt. trading at around 7x operating cash flow. Very high short interest. Recent high is $24. now trading at $13.

seems to me this company will be bought sooner or later by google/msft like big tech companies?

anyone reason why? VOIP is common place nowadays and is offered by many no name providers (do a simple Google search). Google has Google Voice and Microsoft has Skype. I did seen many magic jack commercials so I assume that there are some brand equities.
« Last Edit: July 07, 2014, 06:34:58 PM by PatientCheetah »
risk as little as possible until all the stars have aligned

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valueyoda

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Re: CALL - magicJack VocalTec Ltd
« Reply #2 on: July 07, 2014, 07:15:22 PM »
Cheap relative to near term cash flows and oversold, yes! However, I don't think that it has a sustainable business longer term. I would almost put it in the same category as Outerwall. Outerwall has a core business that will eventually disappear, but near term cash flows remain strong.

sleepydragon

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Re: CALL - magicJack VocalTec Ltd
« Reply #3 on: July 07, 2014, 08:56:54 PM »
neither google voice nor Skype provide the same service I can get from magic jack.
with magic jack, I pay like 30 bucks for one year, and I plug my phone into the ethernet , I can start make and receive calls. very convenient. very cheap. no need to install any software. you go anywhere in the world, you plug in the thing, it will work right away. no need to open your computer, connect to Internet, etc..

google voice is tied up with your own real phone. so if u make or receive calls, you are using up the minutes of ur cell phone.

Skype is awful after it's bought by Microsoft. my account was hacked into and someone made international calls to an estern European country with it. and I couldn't get refund from Skype. also, with Skype you use it from your computer (or your smart phone if u get their app),which is less easy to use than magic jack. its plans are also more expensive than magic jack.

peter1234

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Re: CALL - magicJack VocalTec Ltd
« Reply #4 on: July 07, 2014, 11:51:17 PM »

yadayada

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Re: CALL - magicJack VocalTec Ltd
« Reply #5 on: July 08, 2014, 05:43:37 AM »
if you want a dying cash cow in your portfolio look at outerwall. Core business has 300m$ in FCF earning power (capex lower then depreciation from now on) about 70m of that is there to stay (the coin business). ANd they got a new venture that could add another 150-300m$. And you get that with a market cap of 1.2 billion$. And I think redbox is better positioned then this business. I can see redbox around only a bit smaller 6-7 years from now, but I find it hard to see this business still anywhere near as big now. Their edge vs competitors is also not very good. I might prefer Vonage over this one actually.

WeiChiLoh

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Re: CALL - magicJack VocalTec Ltd
« Reply #6 on: September 14, 2014, 03:20:39 AM »
Anyone on this? Seems quite attractive at $11.50. Trades at ~2.3x EV/renewal run rate. While churn rate is ticking down. At 3.1% churn rate, it implies that the average customer stays on for over 2 years and 8 months, or 2.7 year. At current multiples, it kind of assumes that churn rate will go up to 3.6% and has no customer growth. Seems like the downside for this is capped.

Any thoughts?
« Last Edit: September 14, 2014, 03:31:01 AM by WeiChiLoh »

WeiChiLoh

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Re: CALL - magicJack VocalTec Ltd
« Reply #7 on: September 14, 2014, 03:58:49 AM »
The company also owns 30m in deferred tax assets and 12m in prepaid tax assets, which is always good. Negative NWC and low capital intensity which translate to high FCF.

PatientCheetah

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Re: CALL - magicJack VocalTec Ltd
« Reply #8 on: September 14, 2014, 10:47:19 AM »
It's a dying cigar butt. Time is against you. It is cheap but what's the point - it won't compound over time. If fact, its long term stock chart tells us its story very clearly - highly volatile and range bound.
« Last Edit: September 14, 2014, 10:51:13 AM by PatientCheetah »
risk as little as possible until all the stars have aligned

Longer Term: FB MSFT BABA JD YRD

WeiChiLoh

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Re: CALL - magicJack VocalTec Ltd
« Reply #9 on: September 14, 2014, 09:55:08 PM »
While it is true that the industry is shrinking, and the product is mediocre, I disagree with you that the company will not be able to compound its gain. the company is cash generative and with that, wont they be able to invest in R&D and customer acquisitions? Wont investing in R&D improves customer growth and churn rate? A double whammy?