mj Vocaltec press release gives some hints regarding mj Plus

SteveInWa · Post by **SteveInWa** » Mon Jul 18, 2011 6:49 pm

See the press release at this link:

http://www.vocaltec.com/site/modules/ne ... sYear=2011

Some possible conclusions to be made after reading:

magicJack Plus is definitely going to be released. They wouldn't mention this in a PR if it wasn't highly likely, because, as a publicly traded company, they can't legally speculate on future possibilities that won't happen. Of course, there's the "safe harbor" disclaimer, but it would be very unlikely for a corporation officer to screw up this way.

The delay may be caused by a lack of funds to manufacture product, fill the distribution pipeline, and buy advertising. The hint is the new CBO's emphasis on the need to attract investors to raise funding. Given that MJ never did roll out advertising on the MJ dialer screen, and interchange connection fee revenue is probably low (reference Dan's comments WRT the problems they have suing AT&T to get them to pay), they may be short on the amount of cash needed for a successful product launch.

Although not relevant to the mj Plus, it's also interesting to note that the new CBO is the former CEO of Vonage -- not just a nobody.

magicJack Vocaltec is sitting on a lot of (debatably) valuable intellectual property. Dan B. may be an "inventor", but he hasn't done much to move the company forward since releasing the original MJ.

V-Man · Post by **V-Man** » Mon Jul 18, 2011 8:32 pm

Quote from the link above;

"With the new product magicJack PLUS and the service magicJack Apps launching, I feel I am joining at the perfect time. I believe the company will now enjoy a huge amount of growth and profitability with its one-of-a-kind assets and the near monopoly it enjoys."

Inquiring minds wanna know, what "one-of-a-kind assets" is he talking about, the famous magicJack Chat Line Help service?

Yeeaahhhhhhhhhhh BUDDY! They sure got a near monopoly on THAT asset.

cell14 · Post by **cell14** » Tue Jul 19, 2011 12:01 am

I think that hiring of a real business person to run the business operations is probably the best decision Dan made lately; it may move the company away fro the wheeler dealer approach the company was so famous for and make a real serious business with long term prospective out of it.
They will most likely use the same production facilities and distrribution channels for MJ + as they use for MJ.
There is probably a whole bunch of issues the company is dealing with right now.

nailgunner · Post by **nailgunner** » Tue Jul 19, 2011 2:08 pm

V-Man wrote: Inquiring minds wanna know, what "one-of-a-kind assets" is he talking about, the famous magicJack Chat Line Help service?

I assumed he was referring to this mentioned just a little later in the release:

"For instance, do most people know magicJack develops its own VoIP software, has an amazing chip company, owns the top VoIP telecom network in the industry and has the largest capacity session border controller and application software in a 1U server?"

Sounds semi-impressive, but he may also have been referring to the junk USB cable they provide with the MJ.

oldtimercurt · Post by **oldtimercurt** » Wed Jul 20, 2011 4:43 pm

+1

OTC

nostrodamus · Post by **nostrodamus** » Wed Jul 20, 2011 8:49 pm

Has anybody else noticed a crapload of MagicJack ads on TV this week?

No mention of the "Plus", just the same old ads, seems like they're rotating between the Radio Shack ad and the WalMart ad.

So here's my latest theory....

They're trying to unload all the old inventory before they roll out the new product, because obviously nobody is going to buy the "old" MagicJack once the new product is available.

I could see that being a sound business move, if Dan at least did what he said he would not that long ago, and let his existing customers have access to the new device.

nailgunner · Post by **nailgunner** » Wed Jul 20, 2011 9:26 pm

nostrodamus wrote:Has anybody else noticed a crapload of MagicJack ads on TV this week?

I watch a lot of late-night crap TV, and they have been popping the quick 15 second ads on my cable system for way too long and far too often for my liking.

cell14 · Post by **cell14** » Wed Jul 20, 2011 9:51 pm

They're trying to unload all the old inventory before they roll out the new product, because obviously nobody is going to buy the "old" MagicJack once the new product is available.

Rather then spending megatons of money on expensive TV ads, they could simply offer the regular MJ for a discounted price. This might be a better business decision assumed that the are really ready to launch the MJ plus , something I am not quite sure of.

Valiant · Post by **Valiant** » Thu Jul 21, 2011 5:46 pm

star-studded roster?

nailgunner · Post by **nailgunner** » Thu Jul 21, 2011 5:57 pm

Valiant wrote:star-studded roster?

Yea they give out Emmy-like awards to the best VOIP exec's in the business, and last year MJ had 7 of the top 10.

VaHam · Post by **VaHam** » Thu Jul 21, 2011 9:11 pm

I wonder how plagued they are with lawsuits like the West Virginia 911 one. Last I heard they got a stay to work on settlement. I suspect they don't want to get anywhere near a court room and have a precedent set for future potential actions. Since a settlement with a state should be public record and subject to FOIA request I don't think they will be able to hide the amount of settlement.

If MJ is forced to start collecting 911 and perhaps other fees as many other voip providers do then I would think that would affect their pricing or profitability.

BTW with 7 million sold how are they short on cash? Too many acquisitions?

SteveInWa · Post by **SteveInWa** » Sat Jul 23, 2011 4:04 pm

VaHam wrote:BTW with 7 million sold how are they short on cash? Too many acquisitions?

No matter how many they have sold, I see it like a classic pyramid scheme, or think of Bernie Madoff: continued operation of the company, which also has operating expenses, at some point may cost more than incoming revenue, thus needing more new/additional sales to sustain itself. If the magic has worn off (pun intended), and people are turning to other options like Google Voice, Skype, etc, then MJ may be just getting by. MJ, via its Ymax business, is a nationwide CLEC, which has to pay for the cost of running all those switches, routers, and network connections, regardless of how many people are using them. No telling how much that costs, but it isn't free.

Of course, all this is speculation without seeing their balance sheet. I'm not arguing that they ARE short on cash; I'm just speculating that they may be managing the company conservatively, to not spend a lot of money they may not have, on a new product launch. In this economy, it's obviously hard to get credit on risky ventures, such as launching a product people may not buy.

VaHam · Post by **VaHam** » Sat Jul 23, 2011 8:04 pm

SteveInWa wrote:
VaHam wrote:BTW with 7 million sold how are they short on cash? Too many acquisitions?
No matter how many they have sold, I see it like a classic pyramid scheme, or think of Bernie Madoff: continued operation of the company, which also has operating expenses, at some point may cost more than incoming revenue, thus needing more new/additional sales to sustain itself. If the magic has worn off (pun intended), and people are turning to other options like Google Voice, Skype, etc, then MJ may be just getting by. MJ, via its Ymax business, is a nationwide CLEC, which has to pay for the cost of running all those switches, routers, and network connections, regardless of how many people are using them. No telling how much that costs, but it isn't free.

Of course, all this is speculation without seeing their balance sheet. I'm not arguing that they ARE short on cash; I'm just speculating that they may be managing the company conservatively, to not spend a lot of money they may not have, on a new product launch. In this economy, it's obviously hard to get credit on risky ventures, such as launching a product people may not buy.

I remember Sunrocket

nostrodamus · Post by **nostrodamus** » Sun Jul 24, 2011 4:48 pm

Yeah, when Sunrocket up and died, that's how I ended up going with the Magic Jack in the first place.

The phone and the ATA I got with the Sunrocket deal still work great. Or at least the ATA did until Dan crippled it.

Oops... did I just say that out loud?

VaHam · Post by **VaHam** » Sun Jul 24, 2011 7:28 pm

nostrodamus wrote:Yeah, when Sunrocket up and died, that's how I ended up going with the Magic Jack in the first place.

The phone and the ATA I got with the Sunrocket deal still work great. Or at least the ATA did until Dan crippled it.

Oops... did I just say that out loud?

Well you could always recycle it again to another provider. With VoipMyWay's current price of $60/yr it is only 3X MJ's cost/yr and a lot less hassle!

Unfortunately old MJ dongles are not as useful for re-tasking

nailgunner · Post by **nailgunner** » Fri Jul 29, 2011 6:51 am

SteveInWa wrote:
No matter how many they have sold, I see it like a classic pyramid scheme, or think of Bernie Madoff: continued operation of the company, which also has operating expenses, at some point may cost more than incoming revenue, thus needing more new/additional sales to sustain itself.

That's the basic business model of most companies that sell a durable product and not a service or disposable product. How long would Dell stay in business if they didn't keep selling more computers? That's why companies are always coming out with new models, new products, or expanding into new markets.

They may have spent too much on product development with MagicTalk and the Plus, and be low on cash, but a pyramid scheme? That's when you are selling nothing, usually a worthless investment, and paying off old customers with new customers money. They have a viable product. It could be a very poorly run company. But with VocalTec involved now even that seems less likely.

SteveInWa · Post by **SteveInWa** » Fri Jul 29, 2011 5:18 pm

nailgunner wrote:
SteveInWa wrote:
No matter how many they have sold, I see it like a classic pyramid scheme, or think of Bernie Madoff: continued operation of the company, which also has operating expenses, at some point may cost more than incoming revenue, thus needing more new/additional sales to sustain itself.
That's the basic business model of most companies that sell a durable product and not a service or disposable product. How long would Dell stay in business if they didn't keep selling more computers? That's why companies are always coming out with new models, new products, or expanding into new markets.

They may have spent too much on product development with MagicTalk and the Plus, and be low on cash, but a pyramid scheme? That's when you are selling nothing, usually a worthless investment, and paying off old customers with new customers money. They have a viable product. It could be a very poorly run company. But with VocalTec involved now even that seems less likely.

My comment, "thus needing more new/additional sales to sustain itself", taken in isolation, could be taken as the obvious model of any business, but perhaps I didn't make myself clear. A pyramid scheme was an extreme analogy, I agree.

I meant that they could be in a situation whereby their cost of goods and services (what they are selling and supporting) is barely covered by, or perhaps exceeds, the price of each unit sold. This model is unsound, and it only works for a while, when you sell a product or service below its long-term cost. This model typically has a combination of start-up capital and high initial sales revenue. Eventually, if your sales level off, but your fixed operating costs don't go down, you get into a cash crunch. Perhaps a better analogy would be the "dot com" bubble, which seems to be resurrecting itself now, whereby companies get venture capital to offer some service well below cost, or even for free, and then their initial business model (we'll make tons of money on advertising) eventually catches up with them.

Again, this is all speculation, without seeing a financial report. Let's move on.

nostrodamus · Post by **nostrodamus** » Fri Jul 29, 2011 7:42 pm

nailgunner wrote:
They may have spent too much on product development with MagicTalk and the Plus, and be low on cash, but a pyramid scheme? That's when you are selling nothing, usually a worthless investment, and paying off old customers with new customers money. They have a viable product. It could be a very poorly run company. But with VocalTec involved now even that seems less likely.

It's not unheard of for a "startup" company" to "pay off old customers with new customers money", though obviously its not a viable long term business model. Trust me on that one.... I used to be part of a software company that gambled on that "strategy" and failed. Miserably so. Thankfully, I was just an employee and not on the hook for their bills.

In Dan's case though I doubt this is the situation. YMax was a fairly well established VOIP/telecom company before the Magic Jack, and considering he basically bought VocalTec (as opposed to the other way around) and also bought a women's soccer team in Florida around the same time, it would seem they aren't hurting for money. Or have one HELL of a line of credit.

That being the case, it would seem that whatever the holdup on this Plus rollout is, it would be a technical issue rather than a financial problem. Though none of the reviews I've read would indicate the device isn't ready for release, so that also sounds unlikely.

Who knows? All I know is that it's now a matter of days before I'm no longer a Magic Jack subscriber unless the Plus is available.

nailgunner · Post by **nailgunner** » Sat Jul 30, 2011 12:12 am

SteveInWa wrote:
My comment, "thus needing more new/additional sales to sustain itself", taken in isolation, could be taken as the obvious model of any business, but perhaps I didn't make myself clear. A pyramid scheme was an extreme analogy, I agree.

I meant that they could be in a situation whereby their cost of goods and services (what they are selling and supporting) is barely covered by, or perhaps exceeds, the price of each unit sold. This model is unsound, and it only works for a while, when you sell a product or service below its long-term cost. This model typically has a combination of start-up capital and high initial sales revenue. Eventually, if your sales level off, but your fixed operating costs don't go down, you get into a cash crunch. Perhaps a better analogy would be the "dot com" bubble, which seems to be resurrecting itself now, whereby companies get venture capital to offer some service well below cost, or even for free, and then their initial business model (we'll make tons of money on advertising) eventually catches up with them.

Again, this is all speculation, without seeing a financial report. Let's move on.

Uhh, yea, operating on a very thin or even a negative margin is a "slightly" different animal than running a pyramid scheme.

It wouldn't surprise me if they lost money on every device they sold as a kind of loss leader. I'm sure they know what a typical MJ user nets them in termination fees in a typical year, so if they lost a few bucks on the device, but make more than that in fees, that's fine with them, just get the customers on line any way you can. It could be why they are pretty aggressive on blocking calls to high fee exchanges.

Regardless, we are at the end of another month and I'm still haven't received an email offering first crack at the Plus.