J2 Global's changing fortunes getting noticed on Wall Street. (Corporate Focus).

A year ago, j2 Global Communications Inc. was just another struggling Internet company, trading in the $2 to $3 per share range -- losing money and seemingly forgotten by the investment community.

"When we had our quarterly conference call, you could hear the crickets in the background," said Scott Jarus, j2's president.

Then something unusual happened.

With the help of a couple of earlier acquisitions, the Los Angeles-based company expanded its offering of fax-to-email and voice-to-email services to a broader platform called "unified messaging," which helps users manage all of their incoming voice, email and fax messages from one place.

Building on its toehold in the corporate market, j2 started to sell the newly acquired services and, with revenues growing, it began to turn a profit. Jarus began making the rounds of Wall Street, talking to whoever would listen.

The message was simple: "Watch what we do, and if we execute on the plan, just keep watching," Jams said. "Those people became more interested and as we got successful, they spread the word to others."

Eventually, Wall Street did take notice. In the past two months, two brokerage firms have picked up coverage on j2. Institutional investors have purchased the stock, including the mammoth Fidelity Investments, which owns a 3.3 percent stake.

At a recent price of $25.56, j2's stock is up 526 percent for the year. It's been a stunning turnaround, but one built on day-to-day successes.

"There's no secret (j2 is) a busted dot-com," said Stephen Levenson, a Gerard Klauer Mattison analyst who picked up coverage earlier this month. "They had the good fortune of raising a lot of money in an IPO, and they didn't spend it all."

The company raised $81 million in a July 1999 initial public offering, at $38 per share. Through the end of 2001, j2 had used $62.6 million of those funds, and its accumulated losses totaled $70 million.

This year, there have been profits. For the second quarter ended June 30, j2 reported net income of $3.3 million, compared with a loss of $1.7 million for the like period a year ago. Revenues rose to $11.3 million from $7.9 million.

The company had $23.4 million in cash in the second quarter. It is scheduled to report third quarter results Oct. 28. Jarus declined to discuss earnings, but the company recently confirmed previous guidance for 2002 net income of 96 cents a share.

In truth, j2 wasn't in as bad a shape at the end of last year as it seemed to be. The company lost $8.7 million in 2001, but after $9.5 million in acquisition-related depreciation and amortization costs were figured in, cash flow was a positive $1.7 million.

But there's little doubt that the entry into corporate markets, where customers include Sony Pictures, Wells Fargo and The New York Times Co., has helped things along. Corporate accounts generated 20 percent of j2's revenues in the second quarter, and are projected to make up 25 percent of revenues in 2003, said Levenson.

J2's business has lots of partial competitors. For fees ranging from $4.95 to $12.50 per month, j2 herds a user's incoming phone, cell phone, email and fax messages to a centralized email address.

Any number of Internet service providers can corral emails into one in-box. Other companies will set up a corporate network that integrates phone and fax with email as well, but it is expensive to set up.

"Our job is to convince a company that they don't need to spend thousands of dollars on a fax solution," Jams said.

Analysts don't usually admit it, but they don't often get involved with a company unless the firm stands a chance of gaining investment banking business or attracting large institutional shareholders to buy the stock using the firm's brokerage.

GKM has disclosed plans to seek investment banking business from j2, but Jams said the company has no current plans to raise any money. Levenson said the firm will bring j2's management to meet with institutional investors in November.

[GRAPH OMITTED]

J2 Global Communications Inc.

Stock Prices

       Oct. 23, 2001  Oct. 23, 2002

10/01      $2.57
10/02                     $27.70

Note: Table made from line graph
YEAR (Dec. 31)                  2001     2000

Revenue (millions)             $33.2    $13.9
Total Expenses (millions)         42     38.5
Operating Income (millions)    (8.7)   (24.6)
Net Income (millions)          (7.8)   (22.2)
Earnings Per Share           $(0.70)  $(2.44)

SUMMARY

Business: Messaging services

Headquarters: Los Angeles

CEO: Scott Jarus

Market Cap: $299.7 million

Dividend Yield: N/A

Total Liabilities: $7.1 million

P/E Ratio: 174.7

Long-Term Debt: $125,000

Financial Editor Anthony Palazzo can be reached at 323-549-5225, ext. 224, or at [e-mail].