javascript return of recursive function

You have to return all the way up the stack:

func2.call(this, sWord);

should be:

return func2.call(this, sWord);

You need to return the result of the recursion, or else the method implicitly returns undefined. Try the following:

function ctest() {
this.iteration = 0;
  this.func1 = function() {
    var result = func2.call(this, "haha");
    alert(this.iteration + ":" + result);
  }
  var func2 = function(sWord) {
    this.iteration++;
    sWord = sWord + "lol";
    if ( this.iteration < 5 ) {
        return func2.call(this, sWord);
    } else {
        return sWord;
    }
  }
}

Your outer function doesn't have a return statement, so it returns undefined.