j2 Global Inc. (JCOM - Analyst Report) , a leading provider of unified messaging capabilities, recently declared that it has acquired MetroFax, Inc, a Internet fax service provider based in Bellevue, Washington. However, the terms and conditions of the deal were not disclosed by any of the companies.
At present, j2 Global commands approximately 30% of the world’s digital faxing systems. So, the acquisition of MetroFax will further strengthen JCOM’s market share. 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 its acquisition.
j2 Global primarily depends on inorganic growth for expansion. Last year, the company made six acquisitions related to cloud-based service. The acquisitions were mainly across Europe and Australia with a total capital spending of nearly $198 million. The aggressive buyout strategy of the company will consolidate its leading position in the virtual PBX market.
Other Stocks to Consider
j2 Global currently has a Zacks Rank #2 (Buy). 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 Radware Ltd. (RDWR - Snapshot Report) . Both Open Text and Radware Ltd. currently has a Zacks Rank #2 (Buy) while AVG Technologies have a Zacks Rank #1 (Strong Buy).