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Technology Stocks : IDT *(idtc) following this new issue?*
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To: Hawkmoon who wrote (1349)1/11/1999 2:52:00 PM
From: Tom Caruthers  Read Replies (2) of 30916
 
You know...I haven't been able to get a hold of the complete report but apparently the CS First Boston's analyst's main concern is eroding long-distance charges which will ultimately eat into the margins of all long distance telcos. IMO, this is faulty analysis in downgrading IDTC. It seems to me that: IDTC is one of the reasons that long-distance rates are dropping in general I don't think any of us have seen other carriers offer international long distance rates at less than $0.10 per minute. Even with the $0.99 monthly fee for net2phone direct, it still works out to a maximum of $0.15 per minute to major European cities. That's a great deal. This price per call decreases with more card recharging/use. Calling card sales were $67 million in the last quarter...10 fold what it was the previous year and accounting for more than 50% of revenues. Leveraging mass marketing/distribution to ethnic communities, and telecom capabilities in VoIP, they are the only company that I know of who is providing international calling this cheaply. This means that yes...there are lower margins here, but if they can do this profitably....the higher volumes/ gain of market share should make up for this. Their annual report says that the regular Net2phone software division is losing money....I think it was around $1.5 million last year...not bad since it was mainly due to increased investment in the product. However....the Net2phone direct and the recently released Global Direct (uses fiber-optics at $0.12 per minute) calling cards are profitable. We'll see. Tom
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