Calling for Increased Growth

Microsoft's recent purchase of Skype, a leading provider of voice and video calls over the Internet, for $8.5 billion surprised some analysts given the value of the deal. However, more and more people are using the Internet to make phone calls and Skype had 170 million users and over 207 billion minutes worth of voice and video calls and conversations for 2010.

Moreover, I myself am a user of Skype nevertheless I as well use another device called a magicJack, made by magicJack VocalTec Communications, to call my family. The magicJack device simply plugs into my computer's USB port and I can use an ordinary phone connected to the device to call any number in the USA for free without the other person needing to be seated by a computer. In addition, magicJack provides a local USA phone number for most area codes so that callers can as well reach device users anywhere in the world.

The company itself

As for the company itself, which is based in Israel, magicJack VocalTec says that it has sold more than 7 million magicJack devices around the world. magicJack VocalTec has as well recently announced that it believes it will have earnings of roughly $30.9 million for 1Q2011 and revenues per share of $0.22. In addition, the stock in a few words surged 10% last Friday only to settle back down just 0.75% higher during heavier than usual call options trading volume was as well detected. magicJack VocalTec recently closed at $26.38 and has a 52 week trading range of $6 to $39.88 a share.

Another Israeli designer, developer and seller of products for voice, data and video transmission over IP networks is AudioCodes. For 1Q2011, AudioCodes' earnings were $41.0 million compared to $34.8 million for 1Q2010 during AUDC's net income was $3.0 million compared to net income of $1.7 million for 1Q2010. Audiocodes' chairman attributed their results to rising global demand for converged VoIP (Voice over Internet Protocol) and data networks solutions. AudioCodes recently closed at $5.41 and has a 52 week trading range of $2.31 to $8.07 a share

Finally, BroadSoft is a US based provider of VOIP application software to both residential and business clients. BroadSoft recently recorded better than expected results for 1Q2011 that included net income of $3.7 million verses a net loss of $2.6 million a year before. BroadSoft attributed their results to improved margins and strong demand stemming from its North American clients. To boot, BroadSoft has as well raised its forecast for the full year 2011. BroadSoft recently closed at $39.32 and has a 52 week trading range of $7.34 to $55.45 a share.

The bottom line

The bottom line: In the wake of the Microsoft purchase of Skype and as more and more Internet users turn to the Internet to make phone calls, VOIP application providers just as CALL, AUDC and BSFT should see continued growth so then into the future.

John Udovich is a paid contributor of the SmallCap Network. John Udovich's personal holdings should be disclosed above. You can as well view SmallCap Network's complete disclaimer and disclosure.