MagicJack Valuation Swells on Buyback: Israel OvernightLeslie Picker
MagicJack VocalTec Ltd., whose founders pioneered voice-over-Internet technology, rose to the most expensive level in three months after Chief Executive Officer Gerald Vento signaled plans to buy back more shares.
Shares of MagicJack jumped 2 percent to $15.99 in New York yesterday, swelling the Israeli company’s advance since reporting 2012 results last week to 7 percent. MagicJack traded at 8.7 times estimated earnings, up from a record-low 5.6 times in February, data compiled by Bloomberg show. The company is trading 32 percent below its average valuation since at least 2011. The Bloomberg Israel-US Index of the largest Israeli companies in New York fell 0.1 percent to 88.66 yesterday.
“There’s opportunity that we see to build shareholder value,” Vento said in an April 5 phone interview from West Palm Beach, Florida. “If that includes making more buybacks under the existing program or going to the board, that’s all stuff that can be on the table.”
The company, based in Netanya, Israel, has $11.9 million left from last year’s share buyback program and its stock is “undervalued,” said Vento, who succeeded Daniel Borislow as CEO Jan. 1. MagicJack posted an annual operating profit on April 2, the first since its 1996 listing. Net revenue, which the company defines as net of returns and allowances, rose 43 percent.
MagicJack boosted stock buybacks by $23.7 million to $55.9 million in 2012, Kari Hernandez, president of Ink-PR, which represents MagicJack, said by e-mail yesterday. Free cash flow, after funding the share repurchases, was $65 million last year,the company’s highest ever, according to data compiled by Bloomberg.
MagicJack shares have slumped 40 percent from a September high and 59 percent of its tradeable stock was sold short by investors as of the March 15 settlement date. That’s the highest short interest percentage among all companies on the Nasdaq Composite Index, data compiled by Bloomberg show.
“We had a very good year by any measurement,” CEO Vento said. “But by any measurement, we’re undervalued. And it will be our responsibility to continue to report accurately and consistently, and with greater transparency, and hopefully we’ll be rewarded for that.”
The Bloomberg Israel-US Index of the largest Israeli companies traded in New York fell a second day yesterday. Israel’s benchmark TA-25 Index added 0.1 percent to 1,229.26 in Tel Aviv today.
Partner Communications Co. led the advances on the Israel-US gauge, on prospects that competition in the cellular market is stabilizing. Shares of the Rosh Ha’Ayin, Israel-based company advanced 4.9 percent to $6.39. Israel’s second-largest mobile phone provider increased 8.9 percent to 24.93 shekels, or $6.87, in Tel Aviv this morning.
Gazit-Globe Ltd. had the biggest loss on the Israel-US Index, falling 4.2 percent to $13.10. It dropped 4.3 percent in Tel Aviv to 47.31 shekels, or $13.03.
CaesarStone Sdot-Yam Ltd. slumped 3.8 percent to $23.49. The maker of quartz countertops announced that its shareholders, Kibbutz Sdot-Yam and Tene Investment Funds Ltd., are selling 7.25 million ordinary shares in a public offering, according to a regulatory statement. The company will not receive any proceeds from the sale.
Ceragon Networks Ltd. tumbled 7.8 percent to $3.91, the lowest price since 2005. The wireless networking developer forecast first-quarter sales of $91 million at most, according to a statement yesterday. The Tel Aviv-based company previously predicted revenues of at least $95 million. Shares in Tel Aviv added 1.3 percent today to 14.36 shekels, or $3.95.