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Press Release -- February 24th, 2010
Source: magicJack VocalTec
Tags: Equipment, Exchange, M&A, VoIP

VocalTec Announces Fourth Quarter and Full Year 2009 Results

Continued improvement in quarterly revenues to $2.0 million; GAAP net income of $0.7 million

Herzlia, Israel – February 24, 2010 – VocalTec Communications Ltd. (NasdaqCM: VOCL) (the “Company” or “VocalTec”), a global provider of VoIP and convergence solutions for communication service providers, today reported results for the fourth quarter and full year ended December 31, 2009.

Revenues for the fourth quarter of 2009 were $2.0 million, an increase of 4% over the $1.9 million reported in the third quarter of 2009, resulting from continued growth in product sales.

Gross margin for the fourth quarter of 2009 was 60% compared with 64% for the prior quarter, in line with the Company’s normal expected level of around 60%.

On a non-GAAP basis, excluding the amortization of intangible assets and share based compensation expenses, the operating expenses in the fourth quarter were $1.1 million compared with $1.6 in the prior quarter.  Operating expenses were lower in the quarter primarily due to the recording of a R&D grant for 2009 from the Office of the Chief Scientist of the Israeli Ministry of Trade, Industry and Labor amounting to $0.4 million.

The Company reported a non-GAAP operating income in the fourth quarter of 2009 of $0.1 million compared to an operating loss of $0.4 million in the prior quarter.

On a non-GAAP basis, net income for the fourth quarter was $0.7 million or $0.12 per share, compared with a net loss of $0.4 million, or $0.07 per share, in the third quarter of 2009. Net income on a GAAP basis for the fourth quarter of 2009 was also $0.7 million or $0.12 per share, compared with a net loss of $0.7 million, or $0.12 per share, in the third quarter of 2009. Both GAAP and non-GAAP net income for the fourth quarter of 2009 included a tax benefit of $0.6 million.

For the full year, 2009 revenues were $6.4 million compared with $6.1 million in 2008. Non-GAAP gross margin was 64% for 2009 compared with 58% in 2008. Non-GAAP operating loss for 2009 was $2.2 million, compared with an operating loss of $5.5 million in 2008 which excludes a one-time income from the sale of patents and an impairment of intangible assets. The improvement in 2009 was due to a higher gross profit and a significant reduction in operating expenses.

As of December 31, 2009, the Company had net cash and cash equivalents, short-term bank deposits and restricted cash, in the amount of $10.6 million, or $1.82 per share.

Commenting on the results, Ido Gur, VocalTec’s President and CEO, said, “We are pleased with our results, especially since despite a tough year in the Telecom industry, we showed continued growth in revenue and a reduction in costs. This demonstrates that we are very much on the right track to achieving sustained profitability. We also saw a high level of bookings in 2009 and our year-end backlog going into 2010 is strong, providing us with an increased level of visibility.”

Mr. Gur continued, “Our fourth quarter was also eventful from an M&A standpoint. We purchased substantially all of the assets of Outsmart, and we are happy to already report a first order. The acquired technology enables us to capitalize on the convergence between mobile and VoIP – a trend that is becoming increasingly prevalent, with global mobile VoIP users expected to exceed 280 million by 2013.”

Mr. Gur concluded, “For 2010, we expect to continue growing our revenues organically compared to 2009, and also capitalize on sales into the convergence and mobile VoIP markets. While we expect the first quarter to show the normal seasonal decline in revenues, we believe that our 2010 revenues will show accelerated annual growth. At the same time, we continue exploring M&A opportunities that will provide us with additional growth engines for the long-term.”

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Conference Call
Mr. Ido Gur, President and CEO of VocalTec, invites investors to participate in a conference call scheduled for later today, Wednesday, February 24, 2010. The conference call will be held at 9:00am ET. On the call, VocalTec’s management will review and discuss the fourth quarter and full year results of operations and will be available to answer questions.

To participate, please call one of the following teleconferencing numbers, 5 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1 888 281 1167
ISRAEL Dial-in Number: 03 918 0644
INTERNATIONAL Dial-in Number:  +972 3 918 0664
For those unable to listen to the live call, a replay of the call will be available from a link in the investor relations section of VocalTec’s website, at:

About  VocalTec
VocalTec Communications (NasdaqCM: VOCL) is a global provider of carrier-class Voice-over-IP and Convergence solutions for fixed and wireless service providers. A pioneer in VoIP technology since 1994, VocalTec develops and markets  an extensive  VoIP offering enabling the flexible deployment of next-generation networks (NGNs). Partnering with prominent system integrators and equipment manufacturers, VocalTec serves an installed base of dozens of leading carriers worldwide. VocalTec is led by a management team comprised of respected industry veterans.

Forward Looking Statements
This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of VocalTec. The words “believe,” “expect,” “intend,” “plan,” “should” and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the telecommunications and VoIP markets and in general economic and business conditions, loss of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. Should one or more of these or other risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. The Company does not intend or assume any obligation to update these forward-looking statements.

Gali Rosenthal
+972 9 970 3805

GK Investor Relations
Kenny Green
(646) 201-9246

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