NET MONEY |IDT, Net Telephony Pioneer, Using Low Rates To Go Right at Telcos By Arik Hessoldaht sno ace that IDT Corp.'s latest product is codenamed Project David. Deserbed by the company asa service that will ‘break down ar- ‘aie and outdated Goliath-ike networks” the service offers do- Imestic long distance ealing over the Internet for only 3.5 cents a ‘minute to companies buying 7-1 and 73 lines from IDT. 1's the lat. est in along line of IDT ventures that have challenged the giant tel os and fueled significant revenue _rowth over the past several years. ‘Founded in 1900 as international ‘ny, which brings a US. dialtone to callers outside the United Stats, al. Jowsng for cheaper alls 1 1904, the company embraced the inert asa national ISP, ever- ‘tually trating 100000 diakapeus- tomers and 360 dedicated corporate ‘eustomers. Bt by 1906, the year of itsIPO, the ISP market had become ‘crowded, and IDT focused less on the Internet and more on tlecom- ‘munications The company is now a rmajor player in international call "outing and prepaid phone caling cards, with less than 10 percent of its business coming from providing Interet connectivity, ‘Bt it has come back to the In- temet in anew and potentially hy ‘and intemational ealing market, by 2002 they will make up 12 per. cent of those cals. Last quater, IDT reported that use of its. Net2Phone product nearly doubled from the preceding (quarter, from 5.7 milion minutes to 107 milion minutes. ‘And the company recently signed an agreement with Yahoo that will allow users of ‘the ‘search engines “People Search” function to click on hyperlinked phone numbers of people they ook up, and automatically launch the Net2Phone software tomake the cal. 'So far this year, the company has reported profits of $10 milion ‘on revenue of $212.9 milion. Ana Iysts say DT ison track to report revene of more than $300 milion for the fiscal year ending July 31, terational long distance compa ‘up from $135 million inthe 1997 nies stemming from deregulation fiscal year. and privatization in overseas ma- Sil, IDTs stock price is down Kets, and other worries about {rom its high of $88.50 in March, — prepaid caling cards. and has been hovering recently in And IDT faces growing competi- the $20 range, tion inthe Internet telephony busi lian Slash, ID vice president ness including from some ofthe big offinance, said the slides duetoa telcos. ATA, for example, offers general coolingoff in the long dis: Internet telephony lance provider sector, asthe bulk Boston, ilaa, nd San Francisco. Of IDTs revenues stil come from Winther, the IDC analyst, said this area, IDTneedsto show how and when Kevin Moore, a stock analyst it will invest nts network so the ‘with BT Alex. Brown in Baltimore, company can provide more than said he was a bit perplexed by cheap telephone calls and have IDT’s stock slump. “They've been the ability to offer voice, data, doing exactly what they said they and virtual private networks over ‘would do, by bringing strong top- one network. line eamings growth. Tm kind of “For them the issue is timing — surprised to see it languishing,” when do they reap the revenues mame “hen G $008 $295, 6.6%, 2. ADLcom Ba $3.08 $38 s1a4 43.3%, 3. bot 19 $2.28 $2.48 $128 0% 4 15 ‘$188 S188 sar mo ‘5. Micresaft.com” 18.0 $2.38 $2.48 $133, AK 6. MSN.com/Hotmall 19.2 SLB SLAB $9 +84, ‘TL lyoos wa ‘$138 SLB 8 9K, a a a ee 9, Infoseek 0 ‘$965M $902 $82, A 10. Disney.com” = 10.0 SLB SLB sm 4 “te nd i et os ty a ro Srey ed ror in iy ats ea ha nd a