), a still unprofitable provider of Internet-based phone services. Net2Phone claims to be the first to connect Net phone users with the ordinary phone network, having routed more than 1.5 billion minutes of traffic over its Web network. "This is the new Malone obsession," observes one analyst. "Eventually he will end up owning Net2Phone."
Malone's group is composed of IDT, a long-distance company that spun off a big part of Net2Phone in July, 1999; AT&T, which bought 18.9 million shares (14.9 million from IDT and 4 million from Net2Phone itself) in 2000 at 75 apiece; and Liberty Media, headed by Malone, which recently bought Net2Phone shares from AT&T. An investor close to Liberty says Malone paid more than 5 a share. The stock has traded in the 3 to 4 range since mid-July. It closed at 4.30 on Oct. 24.
So why did Malone, who usually buys on the cheap, pay up this time? Malone believes Net2Phone is way undervalued, and he plans to boost its market cap, says a fund manager who bought in on Oct. 23, when the deal was announced. "How many times can you buy a stock for less than John Malone just did?" he asks.
Howard Jonas, IDT chairman, known as a close Malone ally, was named acting CEO of Net2Phone after CEO Howie Balter quit on Oct. 23. Jonas becomes chairman when Clifford Sobel leaves to become ambassador to the Netherlands. Net2Phone President Stephen Greenberg will then become CEO. By Gene G. Marcial