IncrediMail Ltd. ( MAIL) Q1 2011 Earnings Conference Call May 12, 2011 10:00 AM EST Executives Rob Fink – IR, KCSA Josef Mandelbaum – CEO Yacov Kaufman – CFO Analysts Nick Halen – Sidoti & Company Aram Fuchs – FertileMind Capital Kenneth Miller – Nokomis Capital Question-and-Answer Session Operator
Nick Halen – Sidoti & CompanyOkay. And also one more question I had just is kind of a housekeeping question with the model. In terms of the tax rate just going forward, is – I’m assuming this is a one-time thing that we saw in the first quarter. And, going forward, we’ll see similar to what we’ve seen historically around the 27%, 28% range for taxes. Is that fair? Josef Mandelbaum No, as I’ve mentioned and let me – allow me to clarify again. We had very low tax this quarter. The very low tax this quarter was a combination of two factors. Number one, our basic inherent tax rate has gone down and revenue is being – compared to close to 30% in prior years, we’re expecting it this year and going forward to be below 20%. That was the first effect. Besides that we also had a one-time tax credit of about $0.6 million. Yacov Kaufman So just to make sure. Going forward then, Nick, to answer the question just exactly, we would expect to have a lower tax rate than the previous quarters we’ve had in the previous years. So if it was 27%, 28%, 29%, we will expect to see below 20%. Nick Halen – Sidoti & Company Okay. So each quarter you’re expecting it to be low 20%, okay. All right, that’s all I had. Thanks guys. Josef Mandelbaum Thank you. Operator The next question is from Aram Fuchs of FertileMind Capital. Please go ahead, sir. Aram Fuchs – FertileMind Capital Yes, few different questions. You have seen a lot of capital come into these small internet companies again. You’re hearing $3 million, $4 million, or $5 million for nothing more than a business plan. I’m just curious how that’s impacting your acquisition goals and what that might entail if this continues, will you change your capital allocation strategy?
Josef MandelbaumFirst of all, thanks for joining the call, and good question. We are certainly seeing and feeling the influx of capital coming into the markets once again. But I think as I mentioned earlier it seems acting a little bit, because it can’t not impact the overall industry, but not as much for us. As I mentioned in probably some earlier calls, we’re really not going after the startups. I’m not going after somebody who, as you said, has an idea nothing more maybe a mockup or a prototype and they’re getting $5 million of funding and they have evaluation of $10 million or $15 million or $20 million. We’re really looking for companies that frankly may have been there, companies six or seven or eight years ago, but today are frankly a good solid companies who are probably not going to be the billion dollar Googles of the world or Facebooks, but are still a very good company that for us given what we’re looking for and the uniqueness of our strategy complement us very nicely, both in terms of a demographic fit, in terms of a product portfolio fit, and in terms of a revenue fit whether that’s revenue diversification, because they have premium sales or transaction or advertising based sales, and we can add our expertise to them or whether just gives us more volume and search. Either of those things we’re looking at. We are seeing some slight increase which definitely affects the multiples and we’re being very disciplined about that. But it’s probably not affecting us as much as it is affecting probably other people who are looking to buy that young startup who has the potential of being a Facebook. Unfortunately only half a percent of those actually become the Facebook. Read the rest of this transcript for free on seekingalpha.com