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IDT Is Getting A Wake-Up Call

The world's largest supplier of prepaid telephone calling cards, IDT () (IDT), is a success story -- except for its stock, which has fallen steadily since hitting 24 a share early in 2004. It's now at 12. Herbert Denton, president of Providence Capital, which owns shares, calls management ``unfriendly'' to shareholders. True, shareholder equity is up from $26.9 million on July 31, 1996, to $991 million on July 31, 2004. But he notes that the stock is now at its lowest price in the past 40 months. Denton is urging the board to take action. He wants IDT to buy back a lot more shares, pay a dividend, or even put itself up for sale. IDT has a cash hoard of $1 billion, or $9 a share. Denton puts its intrinsic value at 22 based on a sum-of-the-parts valuation. He points out that Institutional Shareholder Services ranks it 2,964 out of 3,000 U.S. public companies in corporate governance. Seven of its 15-man board are IDT insiders. Andrew Baker of Cathay Financial says IDT should put its cash pile to better use to boost the stock. He rates it outperform. CEO James Courter says IDT's goals include raising its stock price and buying back shares. ``Our clean balance sheet allows us to further improve our telecom operations and expand our entertainment business,''he adds.

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. By Gene G. Marcial

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