Earlier this year, I wrote about the troubles I see for the large telecom/cable companies like AT&T and Verizon as everything moves online cutting their services offered from 3 to basically 1 – the internet. If I’m right, then there should be internet based companies that stand to pick up new business. This led me to some of the online VoIP companies and I believe magicJack is the best positioned.
MagicJack is a VoIP (Voice over Internet Protocol) phone company. It’s basically the same thing as a telephone landline but run over the internet instead. The advantage is that it costs approximately 90% less than the telephone companies charge! There are ways to communicate via VoIP that are free (like Skype), but the other person has to also use the service and always be logged in. Paying for a VoIP service like magicJack is a way to have a number, caller ID, voicemail, etc. – basically all the features of a landline. This makes perfect sense for two types of customers: 1) people who still want a home landline, and 2) companies with a business phone line.
You probably know magicJack from their cheesy commercials. Well not anymore… Over the last year they’ve hired new executives, changed their marketing (commercials, packaging design, website) and service center to become much more “professional.” More importantly, they’re also in the process of changing their business model from a one-time sale of the magicJack port to a recurring annual fee for the phone service of a low $30 per year. They’re saying that the sale of the port is now simply a means to acquire new customers which will hopefully become returning fee-based customers each year.
They also have an App created for iOS and Android products, making the service much easier to use. When I look at the recent takeovers, like Facebook buying WhatsApp, it makes magicJack at $350 million look like a potentially very attractive target that could easily sell for 2 or 3 times its current value if they’re able to transition their customer base into mobile users via the App.
On top of simply the story, their earnings call last month was fantastic. I haven’t heard a company this excited about recent changes and their new path in a while! I just needed Mr. Stock Market to sell-off and knock down magicJack’s stock with it for a nice buying opportunity.
magicJack (CALL) – 1 year
I hope everyone has a great weekend, whether you celebrate the Easter holiday or not! Thanks for following,
-Nick