Zacks_Analysts' Blog : j2 Global Facing Legal Challenge - Analyst Blog

j2 Global Communications Inc. (JCOM), a leading unified messaging and electronics fax service provider, recently received a legal notice for infringement of patent from EasyLink Services International Corp. (ESIC). EasyLink complained that j2 Global infringes two of its patent related to Facsimile Form Generation System and Autonomous Multi-Function Peripheral Device-based document communications systems and methods.

j2 Global  has long-standing legal battles with EasyLink and Captaris Inc., a subsidiary of Open Text Corp. (OTEX). Earlier, j2 Global itself filled a lawsuit against EasyLink and Captaris for infringement of two of its patents. These were related to reliable transmission of facsimile and voice messages in email form over the Internet. We believe these ongoing legal actions may exceed cost estimates anticipated by j2 Global.

j2 Global delivers integrated communications services through its unique digital faxing and voice messaging systems. Severalenterprises are now increasingly utilizing digital faxing services to reduce costs and improve security. This helps j2 Global Communications’ corporate fax system to flourish during the economic downturn. Digital facsimile system is widely used by financial services, insurance, and real estate companies throughout the world. Large enterprises are at present focused on reducing hardware footprints and operating expenses.

Competition in the outsourced, value-added messaging and communications industry is fierce and continues to intensify. j2 Global Communications faces competition from, fax-to-email providers, broadcast fax companies, traditional fax machine/multi-function printer companies, unified messaging/communications providers, telephone companies, voicemail providers, companies offering PBX systems and outsourced PBX solutions and email providers.Many of the company’s competitors have greater financial, technical and marketing capabilities, which may enable them to respond more effectively to emerging technologies and changes in customer requirements.

We maintain our long-term Neutral Recommendation on j2 Global. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.