IDT - IDT Corp

[xtreeq]

IDT Corporation Acquires HDmessaging

http://www.hdmessaging.com/idt-corporation-acquires-hdmessaging/

[yadayada]

i have a hard time believing that cloud thing is worth so much. Why isn't it monetized? They earn v little with it. Seems to be based mostly on rumors.

[ratiman]

IDT has announced a three-way split, and judging by the reaction of the stock price, some investors are afraid that the parts might follow the path of CTMB and trade on the pink sheets with no audited reporting. If that's the case, then we could see even more selling.

 

The $200M+ cash will probably be split equally between telecom and the real estate/incubator businesses, with some also allotted to Zedge, in order to avoid spinning off an investment company. The building at 520 Broad St. in Newark is potentially worth $100M or more (480,000 sq ft), and Newark is improving, or at least the business district is improving, the rest is a mess.

[hillfronter83]

I have been buying recently. Excluding cash and real estate, market is valuing their telecom business at less than 3 times EBITDA. And you get Zedge for free. The company is also paying a little less than 5% dividend at current price.

[BG2008]

IDT has announced a three-way split, and judging by the reaction of the stock price, some investors are afraid that the parts might follow the path of CTMB and trade on the pink sheets with no audited reporting. If that's the case, then we could see even more selling.

 

The $200M+ cash will probably be split equally between telecom and the real estate/incubator businesses, with some also allotted to Zedge, in order to avoid spinning off an investment company. The building at 520 Broad St. in Newark is potentially worth $100M or more (480,000 sq ft), and Newark is improving, or at least the business district is improving, the rest is a mess.

 

I'm aware of IDT since 2010/2011.  The building is probably not worth $100MM.  I've been to Newark a couple times and specifically looked at the building.  I think the replacement value is $100MM.  But the economic reality likely doesn't dictate a $100MM price tag as the area looks quite depressed and run down.  Newark is one of the areas where it still reminds me of Brooklyn of 1992 (a bit too early and too violent which implies that institutions won't get involved).  I haven't spoken with Brokers and agents.  But it's one of those things that I have a gut feel for given my real estate background.  Where the building is located at, it feels like you have to give building/space away for free.

 

The $100MM figure has been quoted a lot, but I think people need to challenge that and look at comps and talk to brokers (which admittedly I have not done).  But if you want to be involved in the name, you need to look into it.     

 

 

[hillfronter83]

IDT has announced a three-way split, and judging by the reaction of the stock price, some investors are afraid that the parts might follow the path of CTMB and trade on the pink sheets with no audited reporting. If that's the case, then we could see even more selling.

 

The $200M+ cash will probably be split equally between telecom and the real estate/incubator businesses, with some also allotted to Zedge, in order to avoid spinning off an investment company. The building at 520 Broad St. in Newark is potentially worth $100M or more (480,000 sq ft), and Newark is improving, or at least the business district is improving, the rest is a mess.

 

I'm aware of IDT since 2010/2011.  The building is probably not worth $100MM.  I've been to Newark a couple times and specifically looked at the building.  I think the replacement value is $100MM.  But the economic reality likely doesn't dictate a $100MM price tag as the area looks quite depressed and run down.  Newark is one of the areas where it still reminds me of Brooklyn of 1992 (a bit too early and too violent which implies that institutions won't get involved).  I haven't spoken with Brokers and agents.  But it's one of those things that I have a gut feel for given my real estate background.  Where the building is located at, it feels like you have to give building/space away for free.

 

The $100MM figure has been quoted a lot, but I think people need to challenge that and look at comps and talk to brokers (which admittedly I have not done).  But if you want to be involved in the name, you need to look into it.   

 

I value the real estate at $50m. They bought the building in 2008 for $50m and spent about $20m renovating it recently. They also own another office building in Piscataway, NJ. The cash on balance is about $180m including receivables for Fabrix. At $350m market cap, the remaining telecom(about $50m ebitda) and Zedge is valued at $120m.

[ratiman]

Prudential just invested $400M in a new building (and is considering putting up another tower), Panasonic moved in, another firm is investing $120M to redevelop a 400,000 sq ft building, etc. The Millenium Project will erect an 80 story, 1000 ft tower, the largest in NJ. That doesn't count the $30M vertical farm, the largest in the world. That doesn't sound like Brooklyn in 1992, although Brooklyn in 1992 doesn't sound too bad.

 

I actually think $100M is conservative.

[BG2008]

Prudential just invested $400M in a new building (and is considering putting up another tower), Panasonic moved in, another firm is investing $120M to redevelop a 400,000 sq ft building, etc. The Millenium Project will erect an 80 story, 1000 ft tower, the largest in NJ. That doesn't count the $30M vertical farm, the largest in the world. That doesn't sound like Brooklyn in 1992, although Brooklyn in 1992 doesn't sound too bad.

 

I actually think $100M is conservative.

 

Can you sum up what's the value proposition of 520 Broad St?  Is it a building that should attract tenants on its own?  Who would be the logical tenants?  I've driven through the area recently and the word "urban blight" keeps popping into my head.  What's the attractiveness of the area versus other in the NJ area? How does it compete versus Hoboken, NJ, Jersey City, NJ etc.  It's rather far away from New York City via Path trains etc.  Brooklyn 1992 was really scary.  Brooklyn 2002 was starting to come around.  Brooklyn 2012 is a whole different story.  But it took 20 years. 

 

My gut feel on the property is that $100mm may or may not be reasonable.  But one thing is certain that when push comes to shove, a liquidity event in the private market will have a large range of value and a take a long time to play out rather than say Downtown Brooklyn retail/office or other mature areas.  We all prefer real estate assets values that fluctuates in a narrow range with a deep pool of potential buyers.  This is likely not the case here and depends on a neighborhood trend playing out that can be extremely difficult to see going forward but will seem "obvious" in hind sight. 

 

Any research, comps, etc that you point to would be greatly appreciated.  What is the current tenant base btw?  Is there a robust roster of diversified tenants as of now? 

 

Thanks. 

 

 

[BG2008]

Found this article about Newark being up and coming, it's interesting to read the comment section and actually see some unfiltered responses

 

http://www.nj.com/realestate-news/2015/04/ready_to_move_everything_you_n_2.html

[ratiman]

The building is not a good reason to buy the stock, but it is the biggest asset in the cash/real estate/other business (name?), that's why I brought it up.

 

The more important issue is what IDT intends to do with that business. I assume Shmuel Jonas will be running it and his background (high school graduate, managed some apartment buildings in the Bronx) suggests that it will probably be a real estate business. The Broad St. building was part of a  partnership with Kushner to redevelop Newark as long ago as 2000, so the revival of Newark has been in the works for a long tme.

[ItsAValueTrap]

(*I haven't done any research on the spin.)

 

What's the point of all these spinoffs?  Is Howard Jonas trying to make every relative of his a CEO?

 

There's been a lot of spinoffs.  The sheer number is a little strange.

[ratiman]

For a long time, Jonas was a genius at creating new businesses and recognizing good investments. Probably close to a dozen successful new companies and investments over the last twenty years. Net2Phone. Fabrix. Corbina. IDT Energy. Genie Energy. Zedge. IDT Entertainment, sold to Liberty. Comic books. He had some duds too - buying the Winstar assets burned a lot of cash, and there was a bad debt recovery business in there that didn't work out, plus 1-800-tow-truck. But overall he was very good at identifying new businesses.

 

[plusalpha]

http://seekingalpha.com/pr/14784866-idt-corporation-declares-18-cent-quarterly-dividend

[KJP]

Does anyone have a starting point or rough estimate of what Zedge would be valued at as a standalone public company? 

[ratiman]

Looks like Apple pulled Zedge from the app store. That kind of puts the spinoff of Zedge on hold, I would think. Meanwhile FTC lawyers closely investigating weight loss shakes.

 

 

http://www.topappcharts.com/584485870/app-details-zedge-ringtones-wallpapers.php

[netnet]

IDT pops up on the Tobias's Acquirer's Multiple Screen, (low EV/operating earnings) . http://acquirersmultiple.com/screener/all-investable-stocks/

 

I have not gone through and looked at the numbers myself. His screen are interesting, they have backtested to 18 to 25% annually returns

[bobozou]

Does anyone still own this name?

 

If so, would you mind sharing your quick-outlook at the current price?

[ratiman]

The stock hasn't gone anywhere in years but there are interesting things going on. The bodega business (cash transfer plus point of sale, NRS) is interesting and potentially quite profitable but the business that interests me is net2phone. The president of net2phone describes it as "cloud PBX" but in reports IDT describes it as "Ucaas" and tries to associate the business with Ringcentral, Vonage, etc. It's quite clearly not Ucaas but commodity business VOIP phone service being sold to SMBs outside the US in Brazil, Columbia, Spain, etc. What's interesting is that net2phone builds off of the stranded telecom asset that is still probably a top 5 carrier of international calls. If IDT could turn that business around and make it into a growing business, it would significantly boost the multiple. The closest comparison is Vonage which  like IDT has a profitable but declining consumer business and shifted into business VOIP or Ucaas. Vonage is valued like a growing tech company and IDT is valued like a declining long distance carrier. If net2phone revenues get the point that it turns the telecom division back into a growth business, it becomes a much more interesting stock. IDT doesn't have to turn into a Vonage or Ringcentral to get a better multiple, it just needs to show that it can increase net revenues in telecom and that it has a long runway for growth.

[ratiman]

Prudential just invested $400M in a new building (and is considering putting up another tower), Panasonic moved in, another firm is investing $120M to redevelop a 400,000 sq ft building, etc. The Millenium Project will erect an 80 story, 1000 ft tower, the largest in NJ. That doesn't count the $30M vertical farm, the largest in the world. That doesn't sound like Brooklyn in 1992, although Brooklyn in 1992 doesn't sound too bad.

 

I actually think $100M is conservative.

 

Can you sum up what's the value proposition of 520 Broad St?  Is it a building that should attract tenants on its own?  Who would be the logical tenants?  I've driven through the area recently and the word "urban blight" keeps popping into my head.  What's the attractiveness of the area versus other in the NJ area? How does it compete versus Hoboken, NJ, Jersey City, NJ etc.  It's rather far away from New York City via Path trains etc.  Brooklyn 1992 was really scary.  Brooklyn 2002 was starting to come around.  Brooklyn 2012 is a whole different story.  But it took 20 years. 

 

My gut feel on the property is that $100mm may or may not be reasonable.  But one thing is certain that when push comes to shove, a liquidity event in the private market will have a large range of value and a take a long time to play out rather than say Downtown Brooklyn retail/office or other mature areas.  We all prefer real estate assets values that fluctuates in a narrow range with a deep pool of potential buyers.  This is likely not the case here and depends on a neighborhood trend playing out that can be extremely difficult to see going forward but will seem "obvious" in hind sight. 

 

Any research, comps, etc that you point to would be greatly appreciated.  What is the current tenant base btw?  Is there a robust roster of diversified tenants as of now? 

 

Thanks. 

 

 

 

You were of course 100% right about this. 520 Broad is still empty.

[BG2008]

Ratiman,

 

Thank you for the kind word.  Single assets in non-primary markets without a deep pool of buyers are tough.