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To: Edwarda who wrote (310)	4/9/1999 10:14:00 AM
From: Caravan	Respond to of 419

IDTC huge news report last night. Excerpts below. Softbankt in talks on Net2Phone investment Web investor's move could signal IPO for IDT unit By Steve Gelsi, CBS MarketWatch Last Update: 7:25 PM ET Apr 8, 1999 Also see: NewsWatch SAN JOSE, Calif. (CBS.MW) -- Internet king maker Softbank is in negotiations with IDT to invest in Net2Phone, a further sign that IDT plans to spin off the unit, CBS.MarketWatch.com has learned. Gary E. Rieschel, executive managing director of Softbank Technology Ventures' West Coast office, said Thursday that his company is nearing a deal with Net2Phone, a unit of Hackensack, N.J.-based IDT (IDTC). "We are in the diligence process with Net2Phone," Rieschel said. "There is not a signed deal yet. But I am a real fan of what they are doing and think they will be very successful." Softbank owns big stakes in some of the most heavily-traded Internet companies, including Yahoo and E-Trade. Rieschel declined to say how much Softbank would invest. He said the deal may close within the next two weeks. He declined to comment on the brokers involved in the deal. IPO speculation Speculation that IDT would spin off Net2Phone in an initial public offering has helped boost the company's stock in recent weeks. The stock closed at 12 on Feb. 24. David Readerman, a partner in San Francisco-based Thomas Weisel & Co., said Softbank has a reputation for backing successful Internet ventures. "They've had a real hot hand," he said. "I don't know if their investments are a cause and effect to ensure success, but they've had a good track record." Bullish on Web phones Softbank, whose shares trade in Tokyo under the symbol "SFTBF," owns about 28 percent of Yahoo (YHOO), which reported better-than expected earnings this week. See related story. Softbank also owns stakes in other rapidly rising firms such as E-Trade (EGRP), whose market cap has doubled in the past three months. "Internet telephony is going to be huge," Rieschel said. "Net2Phone is one of the few making a branded play for consumers." He said Net2Phone is one of two Internet-telephony specialists that will be getting an investment from Softbank, but he declined to name the second player. Nor would he comment on reports that Net2Phone may be nearing a distribution deal with the Go Network, which is jointly operated by Infoseek (SEEK) and Walt Disney (DIS).

To: Edwarda who wrote (310)	4/9/1999 11:43:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 419

Edwarda, I never beat ladies. Besides, I like the succinct way you put it! I think the issue is that they both useful in the right context. Free cash flow is an improved accrual system because it incorporates a sinking fund into the the cash out section. This is designed to account for the necessary replacement of assets over a reasonable period at current borrowing rates. So instead of depreciation you have the sinking fund. But it isn't a good surrogate for economic profit. So I really like your characterization in terms of flexibility. Normally this measure is sufficient and desirable, I think, for most analysis. But the problem arises for companies with large floats -- i.e. companies in which the movement of cash is widely separated from the underlying event -- because you get an ineviatble distortion, That's what happens with companies with very low CCCs. And AMZN has about the lowest CCC I've ever seen. So here, I think I would prefer EBITDA as a measure of operating cash flow. That way we get to try to do a bit of matching while eliminating non-cash charges. Bottom line is I think I you need to be flexible in your choice of analytical tools. And for the e-commerce company I think that none of the tools is sufficient by itself. I'm looking at the company's cash flow and trying to invent a decent tool for capturing the essence of the company. I can do it with spreadsheets and financial modeling, but the problem is how to distill that down to a few meaningful metrics. I'll let you know if and when I figure out something makes sense. TTFN, CTC