Some thoughts on IDTC and NTOP for your weekend consideration.
Well, IDTC is back where it was at the beginning of the month. Still think that the mm went short to provide those blocks at 37 1/2 the day before yesterday. Hopefully yesterday they got straight and the stock can act normally on Monday. Seems like whenever IDT is poised for a big move the market hands us a correction. An 11% correction in the Nasdaq last week on top of the previous weakness was just too much to bear I guess.
However, it is notable that IDTC has far out performed all the telecoms and noteworthy, . coms YTD.
quicken.com
A couple of points to ponder.
Telecom stocks were all weak last week. Nobody seems to be able to make money in long distance right now. T is getting killed. WCOM, etc., and what happens to them affects everyone. Everyone is searching for the answer to this issue. The free models for telephony scare people and there is this feeling out there that telephony is cannibalizing ATT's, FON's and WCOM's business but unable to make money itself. There is also the feeling that quality for telephony is so lacking that these companies will never make money. Well, I've got news for everyone. The quality issues have pretty much been resolved. When calls are routed over a proper backbone, thru well engineered gateways, you can barely tell the difference. Most people don't realize but Sprints pin drop service routes almost all their calls over the Internet now and they are doing so using NTOP's gateways and IDTC's backbone. Phone calls that are made computer to computer or computer to telephone using NTOP or dialpad or whatever are subject to the vicissitudes of your computer system, your sound card, the ISP you are using and a host of other anomalies that effect sound quality.
However, I challenge anyone to buy a Net2phone calling card.
net2phone.com
This card allows you to make calls for 3.9 cents per minute from any phone and you cannot tell the difference in sound quality.
Does everyone understand that NTOP is the preferred seller of minutes for priceline.com. Priceline is currently selling millions of minutes for NTOP. People go to their site, buy the minutes and use them over their home or business phone and CANNOT TELL, the difference in clarity?
biz.yahoo.com
For months now ATT has been quietly deploying Net2phone and NTOP gateways across its network and moving their people into 40,000 SF of space at IDT's headquarters in Newark in order to combine their system, network and platforms with IDTC/NTOP. The result will be seamless integration of services and telephony deployment that ATT expects will save their shareholders 10 Billion per year.
Message 13376050
So, the rumors that ATT overpaid for NTOP or that they might not complete or renegotiate the deal are so far from the truth as to be laughable. Indeed, ATT needs IDTC and NTOP badly. Not only will this deal close in the first half of August, at which time ATT will pay IDTC 1 Billion 117M for 14.9M of its 26M shares of NTOP, but you can expect ATT to announce a host of other reciprocal deals with IDTC that should DOUBLE IDTC's current revenue and significantly expand their margins at the same time.
Message 13402217
So, what people don't get here is that nothing is ever free. I remember when WCOM announced they would buy Sprint for 50B right after Sprint announced free nights and weekends. Someone posted, "that"s a heck of a lot of money to be paying for a company that won't make any money." This post was obviously tongue in cheek but made a very good point. NOTHING IS EVER FREE.
I submit to you that IDTC/NTOP is sitting in the catbirds seat here right now. Soon 80% of all calls will be traveling over the Internet and IDTC has the only seamless network that can provide the sound quality and NTOP has become so ubiquitous with their partnerships with ATT, AOL, YHOO, BT, and last week finally MSFT, that they will be presented as the defacto standard to the entire industry.
Have you noticed the deals recently announced by NTOP to integrate into set top boxes? What do you think that's all about? Well, with ATT owning 75% of the cable in this Country I'd say its pretty likely that pretty soon when you order the platinum service from your cable provider, it will include free long distance. But it won't really be free, it will cost $20 more per month and NTOP will get revenue eventually in the billions from this.
biz.yahoo.com
I could go on and on with this but my point is there is confusion right now about what's happening in the telecom industry with long distance. However as shareholders of IDTC/NTOP we are in the unique position of owning two companies that are poised to participate in a lucrative manner in the largest paradigm shift ever to take place in the telecom industry. IDTC/NTOP have painstakingly lined up the partners and real estate and technology to insure ubiquity and the defacto standard. (That is for those that need quality.) All this baloney about free platforms is just that. The holy grail here is not and never will be computer to computer calls or speaking to folks while instant messaging them or the money to be made from advertising to folks while they instant message each other. That's all just part of the fun with the technology. The holy grail is who controls the new ubiquitous platform. The only one that has the quality necessary to seamlessly replace long distance phone calls as we know them. Who has the backing of ATT, Sprint, AOL, MSFT, BT and a host of other players to do so. There is only one company that even comes close and that is IDTC/NTOP
In the fist half of August the deal with ATT will close.
biz.yahoo.com
At that time IDTC will receive 1 Billion 117M for 14.9M shares of NTOP. They will still own 10M shares of NTOP, 5M shares of TRRA, they are DEBT FREE. NTOP will receive 300M
Does anyone think it's c coincidence that on the very same day of the above press release IDTC announced an increase in their share buyback program to 10M shares?
biz.yahoo.com
Or that IDTC had obviously been furiously repurchasing their shares (having purchased almost 3M shares) since their original buyback announcement less than a month before?
biz.yahoo.com
The only thing that is missing here is for the street to figure out what we already know. What the company and all of its partners already know. In my opinion both of these stocks will be trading in the stratosphere in the future. People will look back at prices of today and kick themselves and get divorces because their spouses wouldn't let them buy more and John Malone (arguably one of the most brilliant of all deal makers of all time).
forbes.com
The man who was prescient enough to buy 9.9% of IDTC for 34 1/2 per share, just prior to all this occurring:
biz.yahoo.com
Will be laughing all the way to the bank.
Lets laugh with him. |
