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Technology Stocks : IDT *(idtc) following this new issue?* -- Ignore unavailable to you. Want to Upgrade?

To: Condor who wrote (8623)	5/31/1999 12:19:00 AM
From: Hawaii60	Read Replies (1) \| Respond to of 30916

IDT's Growth Potential A Lot More Than Just Net2Phone: Analyst By Ted Knutson, ZacksNEWS reporter. Fri May 21 12:38:09 1999 IDT Corp.'s (IDTC) stock price has nearly tripled since mid-January on investor excitement over the impending initial public offering of Net2Phone, the company's subsidiary which enables computer users to make phone calls over the Internet. And even if the Internet bubble pops, IDT will still be a growth stock thanks to its lucrative pre-paid calling card operations, says Tom Morabito, an analyst with Scott & Stringfellow. “It's a fantastic market. People love pre-paid cards. People with poor credit. People who don't like bills. Travelers find them a great convenience,” says Morabito. Morabito is considering raising his 12-month target price for IDT shares to the “low $30s.” The stock was trading at $26 ¾ near mid-day Friday. Pre-paid cards account for about 55 percent of IDT's revenues. The analyst says the biggest growth opportunity for company calling cards is selling them to corporations as promotions. The cards frequently show up as "come-ons" for everything from gasoline to greeting cards. “Calling cards have a bad rap as a commodity, but selling them to large institutions as sales incentives is a great business,” he says. Morabito adds IDT is having a great business year. Fiscal 1999, which ends in July, should show sales of $645 million versus $335 million for 1998, says the analyst. He's believes the company will blow away his 1999 estimate with even higher revenues. What's blowing away Wall Street, though, is the anticipation of the Net2Phone IPO, even though the Internet telephony unit is responsible for only 5 percent of IDT's revenues. Post-IPO, Net2Phone should account for 42 percent of IDT's worth, says Riyad M. Said, analyst for Friedman, Billings, Ramsey & Co. (FBR). The FBR analyst's 12-month target price for IDT is $38 of which he figures $22 for its pre-paid calling card and other long distance telephone operations and $16 from its 55 percent to 60 percent interest in Net2Phone after the stock goes public. On Friday, Said raised IDT to “buy” from “speculative buy.” IDT's firming of its Net2Phone IPO plans, and the consortium of Wall Street heavyweights behind the new company are his strongest reasons for the upgrade. America Online, GE Capital and Softbank also have stakes in Net2Phone ranging from roughly 5 percent to 10 percent. A secondary consideration leading to the ranking change is FBR's elimination of “speculative buy” from its ratings system. Said notes Internet telephony is a couple hundred million dollar business now nation-wide that is expected to grow to $3 billion to $5 billion in the next couple of years. The analyst admits he rarely makes a phone call via the Internet himself. “Maybe I'm the right target,” says Said. He says the right target may be consumers and business that make international calls to foreign countries where the call charges are high because of inadequate telecom infrastructure and little competition.