When Facebook forked over $19 billion for the WhatsApp messaging service, visions of a similar mother lode seemed to have danced in the executive suites of at least one late-night TV ad competitor.
And what is this cutting-edge communications hotbed, this First Runner-up in the Next Big Thing Hipness Pageant? Some Silicon Valley startup, some Brooklyn hard-charger all full of creativity, attitude and ironic fedoras?
Um … it’s MagicJack. Of West Palm Beach, F-L-A.
At first blush, this sounds like Ronco’s Pocket Fisherman angling for a bidding war between Google and Apple.
A cable viewer who has not seen — repeatedly — commercials and infomercials for the device that connects to a computer or router to enable voice calls over the Internet … well, that cable viewer may not in fact technically exist.
These would be ads that your grandmother would call low-tech.
But three weeks after the Feb. 19 WhatsApp deal, executives at MagicJack VocalTec dedicated part of their quarterly earnings call to point out the similarities between part of MagicJack’s business and WhatsApp’s, i.e., a growing number of subscribers for a mobile phone application that allows users to communicate for free. Asked a week later whether he was looking for a buyer, MagicJack Chief Executive Officer Gerald Vento called it a “very appropriate question” before going on to say that he’s “never worried about exit strategy.”
An exit strategy?
But you know what? MagicJack shares have more than doubled this year as the company reported better-than-expected fourth-quarter earnings, and hedge-fund manager Whitney Tilson named it one of his picks.
“I’m not surprised that a company like MagicJack would want to ride on the hype of the Facebook acquisition,” said Brian Blau a Gartner’s research director. The WhatsApp deal “raises the value of messaging, and it raises it to the height that maybe wasn’t thought of before, or wasn’t thought of as realistic.”
MagicJack is revamping its mobile app to benefit from the same business model of free communication services offered by WhatsApp.
WhatsApp has more than 450 million members, with 1 million users being added daily. MagicJack said that registered users of its free app jumped 23 percent, to 6.9 million, in the fourth quarter.
OK, bit of a gap there. But still … an exit strategy might be worth thinking about.