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Net2Phone tops 4Q forecasts, sets buyback

Net2Phone (Nasdaq: NTOP) beat analyst estimates by a penny in the fourth quarter.

After market close Thursday, the provider of Internet phone services reported a fiscal fourth quarter loss of $15.9 million, or 29 cents per share, not counting special charges. First Call's survey of seven analysts predicted a loss of 30 cents per share for the quarter ended July 31.

Also Thursday, Net2Phone said it would buyback up to 5 million shares, or about 9 percent of its outstanding stock. The company has about $500 million in cash and cash equivalents, CFO Ilan Slasky said.

Shares of Net2Phone traded at 25.5 in afterhours activity on the Island electronic communications network, immediately following the release of quarterly results. Net2Phone stock closed Thursday's regular trading at 25, up 1 5/16 for the session.

The company recorded $27.8 million in one-time fourth quarter charges from the purchase of Aplio, and $941,019 in amortization costs.

Fourth quarter revenue increased to $24.9 million, up 125 percent year-over-year, 32 percent higher from the third quarter, and more than the company previously told analysts to expect.

"We think we're well on the way to achieving a 'Winner Takes All' strategy," CEO Howard Balter said, during an afternoon conference call.

Gross margin was 41 percent for the fourth quarter. Margins will fall in the near term, the company said, as Net2Phone relies on marketing agreements with the likes of Microsoft (Nasdaq: MSFT) and America Online (NYSE: AOL) to quickly boost retail business. Other noteworthy deals will be announced in coming weeks, Balter said.

Minutes of use on Net2Phone's network rose to 167 million for the quarter, a 38 percent improvement sequentially and 117 percent rise from the comparable period a year earlier. International calls grew as a percentage of Net2Phone's minutes of use, Balter said.

The company had 1.2 million retail customers at the end of the fourth quarter, up 45 percent sequentially.>