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Net2Phone tops analyst estimates

The company beats analysts' earnings estimates, announcing a loss of $14.7 million, or 25 cents a share, on sales of $30.8 million.

Net2Phone topped analysts' estimates in its first quarter Tuesday but still posted a loss.

The Net-based phone company announced a loss of $14.7 million, or 25 cents a share, on sales of $30.8 million. First Call consensus expected the company to lose 30 cents a share in the quarter.

Net2Phone shares closed at a 52-week low of $9.75. Earnings were announced after the close of regular trading.

Net2Phone offers phone calls over the Internet as a cheaper alternative to traditional long-distance carriers, such as AT&T, Sprint and WorldCom. In September, the company announced it would shift gears in an effort to diversify its revenue streams and start a new joint venture, with a minority investment from Cisco Systems, aimed at selling Internet phone-system software similar to what it uses for its own service.

The $30.8 million in sales represents a 135 percent improvement from the year-ago quarter, when it lost $5.4 million, or 11 cents a share, on sales of $13.1 million.

"This quarter's results indicate that Net2Phone's business is healthy and growing," chief executive Howie Balter said in a statement. "Our business model is strong, our margins are strong, and both revenues and minutes continue to increase."

Gross profit margins in the quarter fell to 39 percent compared with 41 percent in the fourth quarter and 48 percent in the year-ago period.

The number of minutes customers used and paid for grew to 214 million, up 151 percent from the year-ago quarter and up 28 percent from the fourth quarter.

The company's customer base grew to 1.8 million, up 50 percent from 1.2million last quarter.

Last quarter, Net2Phone topped analysts' estimates when it posted a loss of $15.9 million, or 29 cents a share, on sales of $24.9 million.

All six analysts covering the stock rate it a "buy."

First Call consensus expects Net2Phone to lose $1.15 a share in the fiscal year.