The shares of VocalTech had on Friday a record for the past year jump in price and volume. The stock price jumped suddenly in the afternoon and closed the session at $3.30 with the tremendous 150% increase. Trading volume also burst out to more than 1 million shares traded, or nearly 24 times more than the average. It seems like two announcement have made the shares get oversold in such a short period of time.
The sudden and skyrocketing investor interest towards the Israel-based VoIP equipment providing company woke up on an announced merger with a company, whose main product is the voice over IP device magicJack. According to the press release, part of the deal is a one-for-five reverse stock split of the shares, which would after that be worth $17.50 each.
The reverse stock split has taken its effect on the stock price, though the merger is not officially confirmed yet and the press release says further that it is actually an IPO-free way to take magicJack public as the number of shares afterwards will be even higher than currently. The symbol change has happened already, but the company’s further plans for boosting up revenues and for getting profitable sound somewhat too optimistic.
VocalTec has suffered substantial losses since inception in 1989 and the sales in the past did not grow fast enough to cover the operating expenses. Overall, it seems that the business is shrinking, as the number of employees has been cut off over the past three years and some previous acquisition did not improve that situation.
Currently, the company relies on selling VoIP products as the only source of revenues, but is seems that it has still not found its place on the market and still needs to establish stable customer base, as well as demand and acceptance for its products. This will certainly be a difficult task in the telecommunications equipment market, which already offers enough of products and services.
If exactly the magicJack is the innovative and unique product that will bring in the urgently needed revenues, is however somewhat questionable, as its users do not seem to be completely satisfied so far.
