) aims to be a big player. Eric Buck of Janco Partners, who rates the stock a buy, says it is working toward becoming an outsourcer to cable operators of what is called "voice over the Internet protocol" (VOIP) services. Net2Phone has an existing VOIP business that he expects to bring in $118 million in 2005, up from an estimated $83 million in 2004.
Now, he says, it is offering a VOIP system to cable operators that lets them provide such services to their customers, sparing them the expense of building their own networks. Net2Phone won't use the public Internet but rather its own Net-managed system that assures quality and reliability.
Based on cash flow and buyout multiples, Buck sees the stock, now trading at 6.81, hitting 11 in a year. Net2Phone has yet to make money. Rick Schottenfeld of Schottenfeld Associates notes that, with IDT and Liberty Media, led by John Malone, jointly with 57% of the voting power, Net2Phone is a great play on the budding VOIP market. Schottenfeld owns shares.Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. See Gene on Fridays at 1:20 p.m. EST on CNNfn's The Money Gang.