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MagicJack's Pre-Earnings Gains Disappear After Mixed Report: StockTwits.com

NEW YORK (TheStreet) -- Folks playing magicJack's (CALL) earnings saw profits disappear Monday evening. The stock climbed nearly 9% in advance of the Voice-Over-IP company's first quarter earnings report, released after the bell. But it immediately fell more than 6% in after-hours trading.

$CALL I feel sorry for all the call buyers before earnings. I was lucky to sit this one out. ? John Doe (@stockgreens) May. 12 at 04:17 PM

MagicJack reported non-GAAP diluted EPS of $0.53 on $35.3 million in net revenues. Those results beat Wall Street's consensus EPS estimates for $0.49, but fell nearly $2 million shy of sales expectations.

$CALL 0.53 vs 0.49 & raises rev guidance. Miss on revs though. ? Tutti (@Tutti) May. 12 at 04:07 PM

Management's promise to accelerate revenue growth in the back half of the year, and a deal that could fuel sales in South America, helped stem losses. MagicJack CEO Gerald Vento said that the company has strengthened the management team, balance sheet and deepened retail relationships in order to accelerate sales when magicJack releases new products.

"While we recognize that Q2 is a transition quarter, we are excited about the opportunity to renew growth in the second half of 2014," Vento said.

$CALL Maybe lower sales due to new product launch later this month. Will know after conf. call ? Nemi (@nemi) May. 12 at 04:27 PM

MagicJack also announced a deal with Telefonica S.A. to sell magicJack's products in Latin America. "This agreement is a significant first step in implementing our International distribution strategy," said Vento in a press release.

$CALL "Telefonica, S.A. has approximately 185 million mobile customers and 25 million landline customers in Latin America"..Nice! ? Alto Ster (@Good2go) May. 12 at 04:18 PM

Some investors said the stock's after-hours response could not be trusted. They argued that the low volume made it difficult to know if investors truly wanted to punish magicJack for the sales miss or were sufficiently excited about the EPS beat to drive gains Tuesday.

$CALL Low volume after hours. Market still very undecided about whether to buy sell or hold it seems. Although tilt is negative ? IPO Chaser (@IPOChaser) May. 12 at 04:23 PM

$CALL stock caught in AH illiquidity. Prices in this market mean little. Better to wait for the morning sunshine clarity. ? JMar (@Sliver) May. 12 at 04:18 PM

But others said that magicJack's big trick -- enabling users to quit the phone company by talking over the Internet for less than $3-a-month -- was no longer impressive in a world with free video calls via Skype and cable service bundling. Often, the cable company offers packages for television, Internet and phone that, essentially, throw-in relatively inexpensive phone service. The stock has 40% short interest, according to shortsqueeze.com.

@Tutti There are about 5million shares short, a substantial chunk of the float, they think it will tank, but they are tomorrow's buyers. ? Steve Hane (@CoveredCallHunter) May. 12 at 01:06 PM

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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