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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread. -- Ignore unavailable to you. Want to Upgrade?

To: Ausdauer who wrote (31)	3/9/1999 9:22:00 PM
From: Will Lyons	Respond to of 194

Bill Aus and thread I second the motion re IDTC Per share sales + book value + cash = $32 which is more than double the current price. IDTC is actually showing a profit while going after markets and building networks Check out the news on Yahoo re the arrangements that IDTC is making. Remember the announcements that SNDK made recently and compare them with the news on IDTC I think IDTC may be another winner. Lets hear some arguments pro and con The future lies ahead

To: Ausdauer who wrote (31)	3/9/1999 11:24:00 PM
From: Bill Zeman	Read Replies (2) \| Respond to of 194

Aus You said, "I would worry that they are undercutting competition and taking a loss in the process. That business plan won't work in the long run." IDT earnings have not blossomed as of yet because they are still building out their international network. All those capital expenditures are a drain on earnings, but even with all the network expenses, IDTC is still profitable. They ARE NOT loosing money on the business they are generating. Even if they have to go on the spot market to get wire for their calls, they still make about a 10-15% margin. The reason the stock is down now is for a very similar reason that SNDK got wacked down to single digits: Growth pains of a young business cause earnings to fluctuate unfavorably for a few quarters. You know Wall Street. They will cream a stock because of short term earnings problems. You also asked, "Your evaluation would indicate that they are going to have revenues that greatly outpace operating costs and earnings will rise abruptly?" Yes! When their network build out is complete, earnings will sky rocket. 2 conf calls ago they said it would be another 2 or 3 quarters until they have it built out enough to support the vast majority of their minutes. They are also going to make a lot of money on the new switch they invented. This alone could be a multi-billion dollar business. Another way they are going to make a lot of money is on the internet business IPO/spin off. this brings me to my last point. You queried, "Also, if the internet business is so promising, why would they spin it off?" At least 3 reasons I can see: 1. They will make money on the IPO, they will probably even pass some of it on directly to shareholders. Perhaps 1 share of the IPO for each 3 or 5 shares of IDTC. 2. The nature of an upstart internet business is to loose money for quite some time in order to establish a presence on the net and gain a market. IDTC has been absorbing all the vast SG&A and other expenses associated with developing their extremely promising array of internet products and services. This has been an extensive drag on earnings that will now be removed from the core business. 3. The reason IDTC is not way up right now like all of the other internet stocks is because their core business still dwarfs their internet business. Thusly, the street has not valued it as an internet play, but a telcom. They have not even computed the value of the internet side into the current price of the stock, IMHO. Currently IDT is getting all of the negatives of having an internet company, (massive start up costs), with none of the postives, (outrageous valuations). The IPO/spin off will correct this and both of the stocks will appreciate accordingly. Keep up the good questions. The way I see it, this kind of discourse is what this thread was started for. Bill Zeman