Internet fax and messaging services provider j2 Global (Nasdaq: JCOM) will have an open line for its second-quarter 2007 earnings announcement Monday. Let's look at what's in the mix for j2 Global ahead of the call.
What analysts say:
- Buy, sell, or waffle? A total of 10 Wall Street analysts follow j2 Global; eight of these rate the stock a buy, one maintains a hold rating, and one says to sell the stock. In our Motley Fool CAPS investor database, 239 of our 60,000 users have weighed in with an opinion on j2 Global, giving it five-star rating (as of this writing).
- Revenues. On average, analysts are expecting j2 Global to post quarterly revenue of $54 million, 22% ahead of the same quarter last year.
- Earnings. The average analyst is expecting the company to post a gain of $0.35 per share, 35% higher than the $0.26 reported a year ago.
What management says:
Competitively, j2 Global is in a unique category of communications services. Its products encompass unified communications and business services that have little direct competition beyond companies Captaris and Premiere Global Services (NYSE:PGI). But indirectly, the company must stay ahead of communication services offered by telcos such as Verizon (NYSE:VZ) and AT&T (NYSE:T) and business tools from Microsoft (NASDAQ:MSFT) or Avaya (NYSE:AV).
Delivering unique and integrated communications offerings on a global footprint is what sets j2 Global apart. In particular, management has stated that uptake of its integrated voice messaging and virtual receptionist services have exceeded expectations. As a result, COO Hemi Zucker states that "we have increased our commitment of people and marketing resources to take advantage of this market opportunity." We'll see what impact this opportunity has this quarter.
What management does:
j2 Global's operating and net margins have declined over the past 18 months, but the recent numbers are well within historical ranges. Additionally, one-time gains reported in results at the end of 2005 give the appearance that margins are under pressure, but they're really more stable than they initially appear.
|
12/05 |
3/06 |
6/06 |
9/06 |
12/06 |
3/07 | |
|---|---|---|---|---|---|---|
|
Gross |
79.3% |
79.1% |
78.9% |
79.1% |
79.9% |
80.2% |
|
Operating |
42.5% |
42.7% |
42.7% |
41.2% |
39.6% |
40.1% |
|
Net |
35.2% |
34.3% |
33.8% |
29.1% |
29.3% |
29.6% |
One Fool says:
Margins at j2 Global should actually get some support from price increases the company is rolling out across its subscriber base. While the company has signified that it believes the market will absorb the price increases with minimal negative impact, this Fool will be interested to see if the cancel rate goes up significantly. It may be that j2 Global can command an additional premium for its services, but I'm sure the company -- and investors -- don't want to see price increases negatively affect customer satisfaction and loyalty.
Calling more Foolishness:
Microsoft is an
Inside Value
recommendation.
Fool contributor Dave Mock commands a premium, but that doesn't mean he gets it. He owns shares of Avaya. Dave is the author of
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