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j2 Global Inc.(JCOM - Analyst Report), a leading provider of unified messaging capabilities, recently announced that it has acquired Netherland-based Backup Connect BV for an undisclosed amount.

Backup Connect BV is an online backup company, which helps clients recover lost data. So, purchasing the Dutch firm will not only boost j2 Global’s Cloud services enterprise business but will also drive its top-line growth. Moreover, the company will strengthen its presence in the U.S., UK, Ireland, New Zealand and Netherlands.

The company exited the fourth quarter of 2012 with a strong cash position of $343.6 million and record high revenues of $102 million, up 19.9% year over year, easily beating the Zacks Consensus Estimate of $90 million.

Hence, we believe that a solid cash position coupled with a low debt-to-capitalization ratio of 0.29, has induced the company to move ahead with this acquisition.

j2 Global primarily depends on inorganic growth for expansion. Last year, the company made six acquisitions related to cloud-based services. The acquisitions were mainly across Europe and Australia with a total capital spending of nearly $198 million. The company executed three more buyouts early this year. The aggressive buyout strategy of the company will consolidate its global leading position in the virtual PBX market.

Other Stocks to Consider

j2 Global currently has a Zacks Rank #3 (Hold). The other stocks in the Internet/Application software industry that are currently performing well include Open Text Corp. (OTEX - Snapshot Report), AVG Technologies N.V. (AVG - Snapshot Report) and DTS Inc. (DTSI - Snapshot Report). Both Open Text and DTS Inc. currently have a Zacks Rank #3 (Hold) while AVG Technologies holds a Zacks Rank #1 (Strong Buy).

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