IDT Announces Third Quarter Results and They Are Not Good!

Prepaid phone card giant IDT made public their third quarter results yesterday and the news was not good, an 82 million dollar loss for the quarter, up from last quarters 60 million dollar loss. To get an idea of how bad this really is, last years third quarter results only had losses of around 15 million. Revenue also fell a more modest 7% to $453.2 million from $485.4 million.

From the transcript of the earnings call you can see that IDT has a clear strategic goal of reducing company overhead (which usually means layoffs), dumping many of their unprofitable businesses either through sale or through plain discontinuation and finally pursuing their recent investment opportunities in business like Zedge, Shale Oil and a few others which they believe are going to be viable entities. Here is a quote from Jim Courter:

"The direction of that line is functional with and consists of four basic strategies: one, selling, spinning off, or shutting down nearly all businesses that won’t help us meet our goal; two, reducing our corporate overhead; three, streamlining our core businesses; and four, making modest investments in very limited number of closely managed opportunities."

As far as calling cards go, IDT continued to blame their shortcomings in this field on the unfair practices of many of their competitors but hinted that they are closer to a level playing field now with all of the recent actions taken by the FTC.

The biggest kicker on the whole earnings statement was the 10 million that contributed to the loss for Executive severance packages. IDT was recently cited in some online circles for having instituted some of the most excessively high severance packages in recent years for a business of it's size.

Golden parachutes aside, the results from this quarter can't get much worse! In the coming months I am sure that many layoffs will come, operational improvements will be made and some assets sold off. So in all I am labeling this as the ultimate crossroads for IDT, they either turn the corner now or risk being too far gone to right the ship! It will be a challenge but 100% possible.

Here is a link to the IDT earnings call transcript and the financial statement for Q3 08.