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Net2Phone beats Street in fourth quarter

Internet telephony provider Net2Phone Inc. (Nasdaq: NTOP) posted a smaller-than-expected loss in its fourth quarter Monday, losing $3.9 million, or 10 cents a share, on sales of $11.1 million. Its shares closed off 2 5/8 to 59 7/8 ahead of the earnings report.

First Call consensus pegged the Hackensack, N.J. company to lose 13 cents a share in the quarter.

The $11.1 million in sales represents an almost threefold improvement compared to the year-ago quarter when it lost $2.9 million, or 9 cents a share, on sales of $4.1 million.

For the year, Net2Phone lost $6.5 million, or 20 cents a share, on sales of $33.3 million versus a loss of $3.5 million, or 11 cents a share, on sales of $12 million in fiscal 1998.

In the quarter, gross profit margins surged to 46 percent, up from 19.6 percent in the year-ago quarter.

"Fiscal 1999 was a landmark year for Net2Phone. Aside from going public and raising strategic equity from prestigious global corporations, we locked up strong distribution agreements with the top players in the Internet today," said CEO Howie Balter in a prepared release. "Our constant evaluation and upgrading of our product as well as the introduction of value-added services will help us dominate the market as well as increase revenues and customer base."

Since its initial public offering in August, the stock surged to a high of 92 5/8 before slipping back below $60 last week.

Net2Phone shares took off early this month after inking a key distribution pact with Sprint Corp. (NYSE: FON).

In the fiscal year, Net2Phone's minutes of use surged to 229 million minutes, up 445 percent from 42 million minutes in fiscal 1998.

International Data Corp. recently rated Net2Phone No. 1 in Internet telephony minutes with a 39.4 percent market share. As of July 31, 1999, Net2Phone had over 325,000 active customers who had used Net2Phone's services during the past three months, a 30 percent increase over the prior quarter.

All four analysts following the stock maintain either a "buy" or "strong buy" recommendation.