NET MONEY |IDT, Net Telephony Pioneer,
Using Low Rates To Go Right at Telcos
By Arik Hessoldaht
sno ace that IDT Corp.'s
latest product is codenamed
Project David.
Deserbed by the company asa
service that will ‘break down ar-
‘aie and outdated Goliath-ike
networks” the service offers do-
Imestic long distance ealing over
the Internet for only 3.5 cents a
‘minute to companies buying 7-1
and 73 lines from IDT. 1's the lat.
est in along line of IDT ventures
that have challenged the giant tel
os and fueled significant revenue
_rowth over the past several years.
‘Founded in 1900 as international
‘ny, which brings a US. dialtone to
callers outside the United Stats, al.
Jowsng for cheaper alls
1 1904, the company embraced
the inert asa national ISP, ever-
‘tually trating 100000 diakapeus-
tomers and 360 dedicated corporate
‘eustomers. Bt by 1906, the year of
itsIPO, the ISP market had become
‘crowded, and IDT focused less on
the Internet and more on tlecom-
‘munications The company is now a
rmajor player in international call
"outing and prepaid phone caling
cards, with less than 10 percent of
its business coming from providing
Interet connectivity,
‘Bt it has come back to the In-
temet in anew and potentially hy
‘and intemational ealing market,
by 2002 they will make up 12 per.
cent of those cals.
Last quater, IDT reported that
use of its. Net2Phone product
nearly doubled from the preceding
(quarter, from 5.7 milion minutes to
107 milion minutes.
‘And the company recently
signed an agreement with Yahoo
that will allow users of ‘the
‘search engines “People Search”
function to click on hyperlinked
phone numbers of people they
ook up, and automatically
launch the Net2Phone software
tomake the cal.
'So far this year, the company
has reported profits of $10 milion
‘on revenue of $212.9 milion. Ana
Iysts say DT ison track to report
revene of more than $300 milion
for the fiscal year ending July 31, terational long distance compa
‘up from $135 million inthe 1997 nies stemming from deregulation
fiscal year. and privatization in overseas ma-
Sil, IDTs stock price is down Kets, and other worries about
{rom its high of $88.50 in March, — prepaid caling cards.
and has been hovering recently in And IDT faces growing competi-
the $20 range, tion inthe Internet telephony busi
lian Slash, ID vice president ness including from some ofthe big
offinance, said the slides duetoa telcos. ATA, for example, offers
general coolingoff in the long dis: Internet telephony
lance provider sector, asthe bulk Boston, ilaa, nd San Francisco.
Of IDTs revenues stil come from Winther, the IDC analyst, said
this area, IDTneedsto show how and when
Kevin Moore, a stock analyst it will invest nts network so the
‘with BT Alex. Brown in Baltimore, company can provide more than
said he was a bit perplexed by cheap telephone calls and have
IDT’s stock slump. “They've been the ability to offer voice, data,
doing exactly what they said they and virtual private networks over
‘would do, by bringing strong top- one network.
line eamings growth. Tm kind of “For them the issue is timing —
surprised to see it languishing,” when do they reap the revenues
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