Bloomberg News

MagicJack CEO Sees Revenue Exceeding Estimates: Israel Overnight

December 27, 2012

MagicJack CEO Sees Revenue Exceeding Estimates

A security guard stands at the entrance to the Israeli stock exchange headquarters in Tel Aviv, Israel. Israel’s TA-25 Index rose 0.4 percent yesterday to 1,185.92. Photographer: Ariel Jerozolimski/Bloomberg

MagicJack VocalTec Ltd. (CALL:US) Chief Executive Officer Dan Borislow said fourth-quarter revenue will exceed analysts’ estimates after the Israeli technology company added a free wireless application.

“We’ve had a breakout year, we’re having a great fourth quarter,” Borislow said yesterday in a phone interview from West Palm Beach, Florida. The company will post quarterly sales of more than $39 million, he said, beating (CALL:US) the $38.85 million mean estimate of two analysts surveyed by Bloomberg.

Shares of the company that offers voice-over-Internet services rose 3.4 percent to $16.26 in New York yesterday, extending their gain this year to 19 percent. Bloomberg Israel- US Equity Index (ISRA25BN) of the biggest Israeli companies traded in New York dropped for a fourth day, losing 0.2 percent to 85.50. EZchip Semiconductor Ltd. (EZCH:US) declined to a seven-week low.

MagicJack is benefiting from higher revenue growth after offering an application that allows customers to make free phone calls from their smartphones and tablets, Borislow said. The company said yesterday in a filing (CALL:US) that its unit, YMax Communications, settled all disputes with Verizon Communications Inc. (VZ:US) Following the agreement, the company stands a better chance to come to an agreement with AT&T Inc. (T:US), Borislow said.

Shares of the Netanya, Israel-based company, have plunged 34 percent this quarter, the biggest slump in four years. The Israel-US gauge is poised for a 1.4 percent decline for the last three months of the year, paring a 5.2 percent gain in 2012.

“It’s the biggest mystery of my business career,” Borislow said about the stock plunge.

Bearish Bets

Short sellers have increased bearish bets on MagicJack to a record. Wagers against the stock have jumped (CALL:US) tenfold to 12 percent of shares outstanding this year, according to data compiled by Bloomberg and Markit, a London-based research firm. That’s in the top 10 percent of most-shorted stocks in the Russell 2000 Index and compares with the equity gauge’s average of 4.2 percent.

MagicJack raised its 2012 earnings estimate to as much as $2 per share, compared with an earlier forecast of $1.50 to $1.80, according to the Sept. 6 statement. The company’s main product is a device that connects to a computer or to a router to enable voice calls over the Internet.

Israel, which has a population of similar size to Switzerland, has 54 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China.

Yokneam, Israel-based EZchip slid 3.5 percent to $33.49. Shares in Tel Aviv fell 3.9 percent to 123 shekels, or the equivalent of $32.98, in Tel Aviv today. Israel’s TA-25 Index (TA-25) fell 0.2 percent as options on the gauge expired.

Fiber Network

Internet Gold-Golden Lines Ltd. (IGLD:US), the holding company that controls Israel’s biggest land-line provider, tumbled 5.2 percent in New York to $3.48. Shares in Tel Aviv yesterday fell 2.3 percent to 12.59 shekels, or $3.37.

Israel Electric Corp. Ltd., the state-owned utility, said it will bid for a government contract to build a fiber-optic network. The company will be competing with Bezeq Israeli Telecommunication Corp. (BEZQ), Israel’s dominant land-line operator, and Hot Telecommunication System Ltd., said Gil Dattner, an analyst at Leumi Capital Markets, a unit of Bank Leumi Le-Israel Ltd. (LUMI)

“It’s a definite potential negative for Bezeq,” Dattner said in a phone interview yesterday from Tel Aviv. “A third fiber infrastructure in the country would have a pretty big impact on the value of Bezeq and Hot.”

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • CALL
    (magicJack VocalTec Ltd)
    • $10.48 USD
    • -0.50
    • -4.77%
  • EZCH
    (EZchip Semiconductor Ltd)
    • $25.11 USD
    • -0.30
    • -1.19%
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