NY Times IPO Writeup May 19, 1999
Internet Phone Caller Plans Offering
By SETH SCHIESEL
In apparently the first initial public offering of stock in a company that
focuses exclusively on transmitting phone calls using Internet
technology, Net2phone Inc., a subsidiary of the IDT Corporation, filed
Tuesday for an initial public offering with the Securities and Exchange
Commission.
Two weeks ago, RSL Communications Ltd., one of IDT's rivals, said it
planned to sell shares in its Delta 3 Internet-calling unit. But RSL has not
yet filed the formal paperwork with the S.E.C. necessary to begin that
process. RSL said it planned to make such filings next month.
Net2phone, which is based in Hackensack, N.J., filed a 306-page
registration statement with the securities regulators late Tuesday.
Net2phone is widely considered the No. 1 Internet telephone carrier.
According to the registration statement, it now has annualized revenue of
more than $26 million.
Some major investors have apparently endorsed Net2phone's business
plan. According to the registration, Softbank, the Japanese technology
company, already owns about 10 percent of Net2phone while units of
America Online and General Electric each own more than 5 percent.
The registration says Net2phone plans to raise as much as $50 million in
the offering. Because it does not specify the number of shares to be sold,
and at what prices, it was unclear what the company's overall market
value would become after an offering.
If the offering is a success, it would be the latest coup for Howard S.
Jonas, chairman of IDT, which would remain Net2phone's largest
shareholder. Jonas helped pioneer a form of international communications
known as callback.
Jonas and IDT declined to comment Tuesday.
According to the registration, the offering is being underwritten by
Hambrecht & Quist, BT Alex. Brown and Bear, Stearns & Company.
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