MagicJack Raises Revenue And GAAP EPS Estimate Range For Full Year 2012

WEST PALM BEACH, Fla. and NETANYA, Israel, Sept. 6, 2012 (GLOBE NEWSWIRE) -- magicJack VocalTec, Ltd. (Nasdaq:CALL), the Voice Experts and cloud communications leader that invented voice over IP (VoIP) and sold over nine million magicJacks®, today communicated recent revised estimates and continued reduced costs. The Company will keep the investment community informed of matters that may be deemed pertinent during the repurchase program as they become available.

Third Quarter Estimate Updates

The Company estimates revenue to be $40-$41 million for the third quarter (over 60 percent growth over Q3 2011) due to continued strong magicJack PLUS™ and renewal sales to customers. In addition, by the end of 2013, magicJack hopes to have sold one million vanity and ported phone numbers. The Company estimates GAAP EPS will be $0.55-$0.80 per share for third quarter. Revenue continues to be easier to estimate than GAAP EPS due to other income/loss and one-time adjustments. During Q3, the company will take a one-time write-down of semiconductor chip inventory that is no longer needed but was previously purchased during a period of uncertain (Japanese tsunami) supply. After applying one-time charges (estimated to be as high as $0.15 per share), the company still expects to produce over $0.50 per share of operating income. Excluding one-time charges, operating income could be over $0.65 per share. The Company believes operating income is the most important measure for investors and analysts to use for evaluating the earnings power of the business.

While magicJack already possesses the lowest telecom cost structure in the VoIP space, the company has successfully reduced these costs even further. The Company expects most of its telecom cost reduction efforts will be completed by Q4 2012. After netting termination revenue we collect against telecom costs, the Company's projected run rate per eligible user is less than $1.00 per year. The efficient cost structure is the primary reason the Company is able to offer free phone service to millions of customers. If the Company was able to collect all access charges, including those in legal dispute in Federal Court, the Company could have net-net telecom costs of $0.00 per eligible user. The company expenses all telecom costs upfront along with media costs for customer acquisition. The Company's maximum revenue booked for access charges was only what it collected in 2012.

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