From CNET. Ailing calling-card business hurts Net2Phone. The Internet telephone company’s first-quarter revenue drops partly because of its quicker-than-expected exit from an unprofitable calling-card business.
Not unexpected. The tables below are created from their financials. This one shows their mix from 2002 to 2003. The calling card business cratered, true. But so did the wholesale long distance and international long distance businesses. Nothing about Net2Phone, despite their recent $65MM capital round, is healthy.
| 2003 | 2002 | |
| Calling Card | 8.9 | 30.7 |
| Product | 0.6 | 3.4 |
| Wholesale LD | 36.1 | 41.7 |
| International LD | 45.6 | 62.1 |
| Total | 91.1 | 137.9 |
The most interesting thing is that these guys have never made a penny in their entire existance, yet they still get funded. The tables below show that in 2001 / 2002 they lost a staggering $612 million. In 2003, they made $17 million, after a $58 million settlement with Cisco pushed them into the black. Why do people keep throwing money at them?
| 2001 | 2002 | 2003 | |
| Total revenue | 150,199 | 137,855 | 91,750 |
| Costs and expenses: | |||
| Direct cost of revenue (exclusive of items shown below) | 108,411 | 78,502 | 52,820 |
| Selling, general and administrative | 168,003 | 116,570 | 53,728 |
| Depreciation and amortization | 23,349 | 23,980 | 11,037 |
| Restructuring, severance, impairment and other items | 70,101 | 141,619 | 7,363 |
| Settlement of Cisco litigation | – | 1,572 | - 58,034 |
| Acquired in-process research and development | – | 13,850 | – |
| Non-cash compensation | 20,545 | 19,556 | 15,304 |
| Total costs and expenses | 390,409 | 395,649 | h="76"> 82,218 |
| Income (loss) from operations | - 240,210 | - 257,794 | 9,532 |
| Interest income, net | 18,531 | 4,162 | 2,021 |
| Income (loss) on equity investments and other expense, net | - 146,973 | - 7,887 | 696 |
| Income (loss) before minority interests | - 368,652 | - 261,519 | 12,249 |
| Minority interests | 2,676 | 15,591 | 4,546 |
| Net income (loss) | - 365,976 | - 245,928 | 16,795 |
| Redeemable common stock accretion | - 532 | - 133 | – |
| Net income (loss) available to common stockholders | - 366,508 | - 246,061 | 16,795 |
Alec Saunders is the Vice President of Developer Relations for BlackBerry make Research in Motion. This is his personal blog, with his personal viewpoints. Prior to this Alec was the CEO and co-founder of Calliflower — the easiest way to hold a meeting, online, on a conference call, or on the go. A double-decade veteran of product management and marketing, he spent nine years at Microsoft where he helped launch Windows 95, the first two versions of Internet Explorer, the Universal Plug and Play initiative, the push into home markets, opt-in email marketing and what might well go down in history as the very first direct email list ever.
