Sidecut Reports

Whenever Dan Borislow decides to write an autobiography, we’ll be first in line to buy the book — because his trek through life never ceases to be interesting. The enigmatic founder of the Voice over IP gizmo known as the MagicJack has now been kicked out of the women’s professional soccer league for, according to the league, an inability to play by the rules. Sound anything like the MagicJack we know in telecom?

In case you didn’t know it, Borislow bought a women’s soccer team and now uses its players like well known star Abby Wambach to promote the MagicJack. Here’s the Miami Herald coverage of the announcement. Here’s a good lengthy post from the sports blog Deadspin, which explains why the league may have taken its actions; and here’s a Palm Beach Post story that seems to believe that MagicJack is a reputable business even though the claims of $100 million in revenue seem mostly a figment of Borislow’s imagination.

We have a standing offer for Mr. Borislow to call and explain things MagicJack and soccer in greater detail… but I wouldn’t hold your breath waiting for him to answer. Even over a MagicJack link.

I’ll leave it to those who have more time to spend with SEC documents than I do right now to sort out all the details, but the initial public offering hinted at by MagicJack founder Dan Borislow last summer has sort-of come to pass, with the announcement of a merger between MagicJack’s parent company and VoIP gear supplier VocalTec, which trades on the public markets.

As befits a Borislow operation, there’s a whole lot of murkiness and mess involved — gotta love the line from the SEC filing that flashes a big red light over any and all proceedings, mainly to do with the fact that VocalTec isn’t a U.S.-based company so doesn’t necessarily have to play by NASDAQ rules. From the merger SEC filing, we quote:

We are a “foreign private issuer” and you will receive less information than you would about us from a domestic U.S. corporation. In addition, we have opted out of certain Nasdaq Marketplace listing requirements.

With the caveats out of the way, what else is interesting about MagicJack? According to the fiscal numbers, MagicJack did indeed have a $100 million revenue year in 2009 as Borislow predicted when we talked to him last — it was actually $117.8 million in revenue according to the document — but the company also incurred a loss of $22 million for the year, mainly due to huge costs like those of the MagicJack devices sold ($23.4 million), advertising ($32.1 million), network and carrier charges ($25.6 million) and $41.8 million in “General and administrative” charges, which seem quite high for a smallish startup of MagicJack’s nature.

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