Talk ain't cheap

This IDT/Net2Phone situation appears to be getting serious. A press release on Bloomberg from Friday states that Bull & Lifshitz is filing a class action against NTOP, and I have been separately contacted by an attorney who claims to represent shareholders jointly holding 2m shares (over 4% of the equity), who has forwarded the letter he has sent to NTOP's independent directors:

"Re: Net2phone, Inc., and IDT Corporation’s attempted buyout at $1.70

Dear Sirs:


I am an attorney and a member of a shareholders group in the above referenced
corporation which has great concern about the possible buyout of the corporation
by IDT Corp.

As you are all aware, NTOP’s great interest lies not just in its cash, portfolio of patents, net operating loss carry forward, facilities and current business, but more importantly, on its partnerings with numerous cable service providers. For your reference, I am attaching a schedule prepared by a fellow member of our group which details that Net2phone and its cable partners will be offering VOIP service to the approximately 3.2 million homes passed by the various cable providers. Net2phone has been extremely guarded in its financial projections, but however these opportunities are valued, it is clear that the values are substantial and that a zero value is inappropriate.

There has also apparently been a fairly compelling case made that MCI’s residential VOIP service trial is powered by NTOP’s VOIP service. (See the following blogs: Eurotelcoblog http://eurotelcoblog.blogspot.com/; Om Malik's Broadband Blog http://gigaom.com/2005/06/29/mci-voip-powered-by-net2phone/; and Voip Watch by Andy Abrahamson http://gigaom.com/2005/06/29/mci-voip-powered-by-net2phone/). Admittedly this has not been confirmed officially, but it certainly does seem likely to be true. What the economic value that will come from this
remains to be seen, but again, a zero value of this opportunity likewise seems
inappropriate.

In view of the company’s current position and its future prospects, the 2 million shares controlled by our shareholder group will vote against a merger with IDT at the price discussed and at any price which is no more than a moderate premium to the $1.70 that was offered.

Should any of you have any questions regarding our group’s position, feel free
to contact the undersigned.

Very truly yours,

xxxxxxx"