"Continued economic weakness in the U.S. should continue to benefit the Company."
There's a line you don't hear every day. But that's exactly how magicJack VocalTec
magicJack has just completed two months of its second fiscal quarter, and wanted to share that it has already beaten analyst estimates for the full quarter. "June results will just be additive," the company said. So far, it looks like magicJack will hit earnings north of $0.43 per share on at least $36 million in sales.
The current Wall Street consensus is that magicJack will hit $36 million in revenue but just $0.29 in earnings per share. The company has a history of either crushing estimates or missing them spectacularly. This update was good enough for a 15.6% overnight share price boost, and though shares have pulled back from those highs, it's still up considerably on the day.
So how can magicJack claim that economic weakness is helping the company? Elementary, my dear Fool: The company sells Internet-based phone service at ridiculously low prices. When family budgets are tight, this low-cost solution inspires more consumers to ditch their Sprint Nextel
Buy a USB dongle for $40 and get phone service for $20 a year, or get a more expensive gadget to score free global calling for life. There's even a mobile app available if you're on the go. The value is pretty obvious. If I ran Sprint or Verizon, I'd either worry about Internet-based calling day and night or start buying specialists in the field until antitrust regulators told me to stop it.
magicJack and Vonage
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