IDT's bargain acquisitions lead to record revenue -- $78M loss reflects buyout cost By MARTHA McKAY, STAFF WRITER Date: 10-25-2002, Friday Section: BUSINESS Edtion: All Editions.=.Two Star B. Two Star P. One Star B
Snapping up bankrupt companies and telephone gear for a song has been good business for IDT Corp.
The Newark-based telecommunications company reported a loss of $78 million, or 99 cents a share Thursday, but posted record revenue. The results include one-time charges of $89 million that involve write-downs and losses associated with acquisitions.
Sales jumped almost 30 percent to $417 million compared with the fourth quarter a year ago, when sales were $331 million.
Despite the loss, IDT showed improvement over last year's fourth quarter loss of $172 million, or $2.44 per share.
"The IDT telecom division is setting records while competitors are falling by the wayside," said IDT Vice Chairman and Chief Executive Jim Courter.
With cash in the bank, IDT has taken advantage of the slumping telecommunications industry to purchase companies in distress. The latest came in September, when IDT went to a bankruptcy auction and bought the rights to use a fiber network from Star Telecommunications Inc. for a reported bargain price of $600,000.
Another high-profile acquisition came last year when IDT bought the assets of the once high-flying Winstar Communications for $55 million.
IDT, which began selling phone cards and expanded in many directions, including long-distance phone service, was once considered an upstart. But while most every other telecommunications company has seen its stock plummet this year, shares of IDT have risen almost 70 percent and trade these days for $17.66 per share.
For the year, IDT raked in $1.5 billion in sales, an increase of 24 percent from 2001, the company said. Overall, however, the company showed a net loss of $303 million for the year.
Retail long-distance service and the phone card business posted strong quarters, the company said, with revenue growth of 37 percent and 18 percent, respectively, compared with the same quarter a year ago.
In other news, Net2Phone Inc., a spin-off of IDT that shares the company's Broad Street headquarters in Newark, also reported earnings Thursday. The company sells telephone service over the Internet.
Net2Phone posted a net loss in its fiscal fourth quarter of $21.6 million, compared with a loss of $65.7 million in the same period a year ago. Per-share figures weren't available. Revenue was $137.9 million, compared with $150.2 million a year ago.
Net2Phone also reportedly said it will cut about 63 employees, or about 20 percent of its workforce, while combining some operations.
The company will incur unspecified costs in its fiscal first quarter ending Oct. 31 for combining its support and high-speed Internet businesses. Net2Phone forecasts savings of $9 million annually from the moves.
Net2Phone was spun off from IDT in 1999. Both companies got their start in Hackensack.
Last year, a limited partnership comprising AT&T Corp., Liberty Media, and IDT, which also controlled the partnership, purchased an interest in Net2Phone. This gave the partners more than 50 percent economic interest and voting control of the company.
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Martha McKay's e-mail address is mckay@northjersey.com
Keywords: TELECOMMUNICATION, BUSINESS, ACQUISITION
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