IDT Releases Q4 Financials and The Numbers are Poor as Expected!

IDT Corporation released it's 4th Quarter earnings on Monday and the results were as expected... poor! In total they had a net loss of $86.4 million mostly due to what they are claiming as restructuring costs. The company has undergone what it calls a major restructuring and to be fair this was announced in the Q3 results and investors were warned that this expense would be hitting the books in Q4. This exercise is going to provide IDT with what they claim will be a cash flow positive business by end of Q1 09.

There is no doubt that IDT has come upon rough economic times and is in need of some major changes to help it survive, but I am afraid this down turn is not unique to them and I am sure if other phone card companies were publicly listed (most of which are not), we would see the same results on their books.

IDT has to accept the fact that telecom is a shrinking business and in order to survive they need to streamline operations considerably. While cutting staff will be the main way to get there, they can't just cut blindly, they will need to streamline all back end operations through new management styles, outsourcing and new systems. This company will ultimately need find another new big cash generating business now or be in the neighbourhood of less than 500 total employees by the end of fiscal 09 in order to have enough cash to survive.

Don't get me wrong, I think IDT CAN DO IT and WILL find a way to survive. However, they need to pick up the pace in order to keep check with the market. Phone cards may be a shrinking business but they will still remain a real business for many years to come!