Author Topic: CALL - MagicJack VocalTec Ltd  (Read 17634 times)

WeiChiLoh

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Re: CALL - magicJack VocalTec Ltd
« Reply #20 on: December 14, 2014, 06:24:39 PM »
I would get more excited at $5.50 though


WeiChiLoh

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Re: CALL - magicJack VocalTec Ltd
« Reply #21 on: December 14, 2014, 06:40:08 PM »
Based on my model, every net 1% add adds $1.20 to the value of the business. Soooo...unless this company is truly revolutionary, which from my experiences, it is not, it would make for a hard buy.

smd123

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Re: CALL - magicJack VocalTec Ltd
« Reply #22 on: December 14, 2014, 09:45:11 PM »
1) It is is NWC negative. While many people like it, in the case for a declining business, negative NWC actually means that when the business starts declining, NWC actually goes up, puting further pressure on cash flow. That $4 in cash can disappear soon.

How did you calculate NWC for the business?

The company ended Sep '14 with 75m in cash, vs. 46m in Sep '13.

WeiChiLoh

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Re: CALL - magicJack VocalTec Ltd
« Reply #23 on: December 15, 2014, 01:21:01 AM »
1) It is is NWC negative. While many people like it, in the case for a declining business, negative NWC actually means that when the business starts declining, NWC actually goes up, puting further pressure on cash flow. That $4 in cash can disappear soon.

How did you calculate NWC for the business?

The company ended Sep '14 with 75m in cash, vs. 46m in Sep '13.

My assumption is cash is non-operating.

WeiChiLoh

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Re: CALL - MagicJack VocalTec Ltd
« Reply #24 on: December 15, 2014, 03:30:15 AM »
Assuming no net add (Churn rate = Add rate), CALL is worth $100m, sounds about right to me.

I used a 15% discount rate and an average 5 years sales to capital ratio.
« Last Edit: December 15, 2014, 03:34:52 AM by WeiChiLoh »

smd123

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Re: CALL - MagicJack VocalTec Ltd
« Reply #25 on: December 15, 2014, 06:57:26 PM »
I would not want to model a decade+ projection for a company like CALL, though you might counter with a 15% discount rate assumption.

A couple of questions regarding the model:
1. By Revenues, do you refer to "Gross Profit"? Averaged over 5 yrs (2010 to ttm) are about $130m/yr, against the $83m in the model.
2. Similarly, EBIT over the last 5 yrs averages to $22m, against your assumption of $15m.

If you are using assumptions based on the trends in the very last quarter (or 2), I want to point out 2 things:
(1) The last quarter is the bottom of their cyclical working cap cycle. They did not push out devices of MJ Plus for new sales, released a new product (MJ Go), spending more on marketing. Rev from new device sales was $3m vs $12m last yr. Also, they incurred ~$2.5m impairment charges in relation to a non-compete agreement with founder, who recently died.
(2) In the latest earnings call, it was mentioned that new devices (MJ Go) are now on shelves and Amazon, and 84k were sold in October. That is $4.2m for October, or ~$12-13m for this quarter.


I wouldn't even extend this quarter 10 years forward, for the same reasons I mentioned above. However, next quarter should see the effect of these numbers showing up in financials, and 2015 will record any and every cent they make/lose with Telefonica. Though I am not fully convinced about the bull case, I do think that the market is pricing them for the worst of their working capital cyclicality, assuming no upside from Mexico partnership, and discounting the value of cash.

It is a cigar-butt with a lot of pessimism surrounding it. However, it is also a cigar-butt with no debt, high cash (57%) and good cash flows.

crastogi

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Re: CALL - MagicJack VocalTec Ltd
« Reply #26 on: January 15, 2015, 11:49:49 AM »
I think it is worth a look.  Not understanding their business in detail but going purely by financials.  (I have spent less than 15 min on this so far - so i may be way off base)

Basically at today's price we are saying business is worth $3/share ex cash.  If the business gets any kind of traction it is at least a double or triple from here.  If it does not, cash provides a floor (at 4.50), provided management does not do something stupid. 

My only concern is the heavy short interest, and with so much cash on hand, why does the management not buy back stock?

thanks for bringing this to the attention of the board.  Worth checking out in detail.  Looks like tilson bought at much higher prices

sleepydragon

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Re: CALL - MagicJack VocalTec Ltd
« Reply #27 on: January 15, 2015, 03:31:43 PM »
I am still holding this stock. I use MagicJack at home. It's pretty good. I am paying like 10 buck/year. It does have some problems: when people call me, the calls do not always go through (15% of the time they will reach voicemail). So i think this is limiting their customers to retail clients only. I also feel there's a lack of direction from the management. No news, no update, no new products. I mean, I hope these guys in Israel are doing something!

Jurgis

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Re: CALL - MagicJack VocalTec Ltd
« Reply #28 on: January 15, 2015, 03:35:43 PM »
I mean, I hope these guys in Israel are doing something!

They are listening to your calls!  8)

(Sorry, just a joke, no contribution to this thread :)).
"Before you can be rich, you must be poor." - Nef Anyo
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philly value

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Re: CALL - MagicJack VocalTec Ltd
« Reply #29 on: January 21, 2015, 11:43:39 AM »
Figured CALL might be due for a bump given the fall over the past week. At $7.05 per share, the market is valuing the business at $50M.