MagicJack Sinks to Seven-Month Low After Cutting ForecastEdith Waringa Kamau
MagicJack VocalTec Ltd., whose main product is a device that connects to a computer or router to enable voice calls over the Internet, sank to the lowest since January after reducing its earnings estimates for the year.
Shares of MagicJack fell 5.8 percent to $12.29 in New York after earlier plunging as much as 15 percent. The Bloomberg Israel-US Equity Index slipped 0.7 percent.
MagicJack lowered its 2014 revenue forecast to about $120 million yesterday from as much as $163 million previously. The company, with headquarters in Netanya, Israel and West Palm Beach, Florida, reported sales of $29.5 million for the second quarter, falling short of the $32.1 million average of two analyst estimates compiled by Bloomberg.
“It was an ugly quarter and guidance was ugly,” Whitney Tilson, managing partner of New York-based hedge fund Kase Capital Management, said in an e-mailed response to questions. “I certainly expected better results than we’ve seen.”
Canaccord Genuity Inc. cut MagicJack from a buy to a hold yesterday and lowered its price target 36 percent to $14.