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MagicJack VocalTec Expects To Earn Over $2.00 GAAP EPS In 2012 With Revenue Growing 20% From 2011 To 2012

magicJack VocalTec, Ltd. (Nasdaq: CALL), the company that invented voice over IP (VoIP) and sold over eight million magicJacks®, will release two revolutionary new products/services, magicJack PLUS™ and magicJack APP™ for Apple products and the PC on September 6, 2011.

Financial expectations include the following items: The company expects to raise its renewal rates to $29.95 by the end of this year. When enacted and coupled with its new products and service offerings, the company expects that this will enhance its bottom line (net income). The company will have increased sales for Q3 2011 compared to Q2 2011. Since the company primarily records revenue over the life of the product or service sale, the GAAP revenue will decrease from Q2 2011 to Q3 2011 as the deferred revenue for these sales increases. Q1 2012 will be the first quarter that sees the full effects of these changes and introduction of new products and services. This will include our pro rated revenue from a complete three months of stocking the retailers’ shelves with the new magicJack PLUS from Q4. The magicJack PLUS and its renewal price will have much greater margins than the original magicJack and its annual fee. The company will also see more revenue from the magicJack APPs in 2012. The projections for revenue growth are after the discontinuance of certain merger-related unprofitable businesses.

The company will continue its successful buyback program with the potential to increase it as it earns more money and cash flow becomes greater.

The company expects the addition of magicJack PLUS and magicJack APP to bode well for the future of the company. The new products and services will expand magicJack VocalTec’s customer base through wider consumer acceptance and increased applicability for small businesses. The future product lifecycle of these new products and services is expected to last for a number of years, particularly as the company will be taking a modular approach to adding features instead of replacing whole products. By the end of Q4 2011, management would not be surprised to see a GAAP run rate EPS of over $0.40 per quarter. If the company grows faster than expected, this may negatively affect income results short term.

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