M&A Journal: VocalTec and MagicJack’s YMAX Tie the Knot

July 16th, 2010 by · 5 Comments

One of the oldest names in VoIP, VocalTec, has merged with one of the greatest disruptive forces today in VoIP, YMAX which is the parent company of both consumer VoIP company MagicJack and Stratus Telecommunications which markets the underlying VoIP network technologies.  The combined company will trade on the Nasdaq starting on Monday July 19 under the symbol CALL.  The combined company pegs its own enterprise value currently at $245M, which will at that time correspond to a $17.50 stock price – following a one for five reverse stock split.  

A big effect of this will be to shine a little light on the finances of one of the more mystifying companies in the sector, MagicJack, which has been aggressively selling VoIP for $19.99/year via a USB dongle for a couple years now and has a femtocell product out there as well.  VocalTec on the other hand has a pile of VoIP patents but practically vanished a year or two ago in terms of active operations.  They had only recently begun to emerge from what was probably their last line of defense.  I am quite curious to see where this combination heads over the next few years.

Revenues for the the combination are expected to fall in the $110-125M range, and the company will have $40M in cash with no debt.  They expect to be profitable as well.  

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Categories: Mergers and Acquisitions · VoIP

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5 Comments So Far

  • Nice job on the reporting here, Rob. $245M???? WOW!

  • Dave Rusin says:

    MagicJack … a good product for residential or a business person who travels.

    I bought at a special last year, 5 years of service for $50.00. No reliability or quality of voice issues.

  • Math says:

    $17.5 (share price) * 11,736,189 (# of shares) = $205.4 M (market cap)
    $205.4M – $40M (cash) = $165.4M (enterprise value),
    So what is the enterprise value? $245M (press release number) or $165M (calculation from other press release numbers) ? maybe someone did a “+” instead of “-” ??

  • Lucidmaze says:

    EV = MC – cash, so $245 = MC – $40M. Therefore market cap MC = $245m + $40M. Then projected price per share is $285M or $285/11.7 or $24.34 after the merger.

  • Frank A. Coluccio says:

    My guess would be that over the coming year CALL will be developing mobile video-enabled and file-transfer features for collaboration purposes, akin to Skype’s applications, thus complementing their existing voice capabilities.

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