Net2Phone jumps on strong quarter
Shares of the company jumped over 17 percent, up 1.75 to 11.50.
Reporting after the bell Tuesday, Net2Phone topped analysts' estimates in its first quarter but still posted a loss of $14.7 million, or 25 cents a share, on sales of $30.8 million. First Call Corp. consensus expected the company to lose 30 cents a share in the quarter.
Reaction to the results from Chase H&Q and Bear Sterns was positive, but the stock was slapped with a downgrade from Robertson Stevens.
On the bullish side, analyst David S. Levy at Chase H&Q reiterated his "buy" rating on Net2Phone.
In a research note, Levy highlighted his positive take on the company's expanded service relationships, along with the strong cash position of Net2Phone.
"Net2Phone has locked up significant Internet real estate that will provide the company with increased minute volume and additional customers. The addition of AT&T, Liberty Media, British Telecom, and Yahoo! to the Net2Phone team should clearly define the company as the leader in IP telephony services and the de facto standard for voice-enabling the new economy," he added.
At Bear Stearns, the outlook was also positive as the brokerage bumped up it fiscal year 2001 revenue and earnings estimates for the company. For the period, revenue was raised to $152.8 million from $149.5 million, while loss per share was trimmed from $1.13 to 86 cents.
Analyst Richard A Juarez at Robertson Stephens, however, rained on Net2Phone's parade. He cut the company's rating to "long-term attractive" and reduced earnings estimates.
"We are lowering our rating to Long-Term Attractive based on: 1) the continuing absence of specific management guidance on the potential revenue related to Adir Technologies, AT&T, Broadcoma , and other new initiatives; 2) increased SG&A expenses in FY01 and the prospect of additional expenses related to new initiatives; 3) somewhat contradictory announcements regarding the company s revenue and business model for the domestic PC-to-phone segment; 4) risk related to overall slowing in economic growth," Juarez wrote in his research note.
He lowered earnings estimates for fiscal year 2001 to a loss of $1.11 from $1, while raising revenue estimates for the period to $150.3 million from $149.5 million.