IDT Posts Loss for Quarter, But Gains in ARM Unit IDT Carmel

IDT Corp., a multinational holding company with its fingers in all kinds of pots, reported Wednesday a widened loss for its fiscal third quarter of 2008, ended April 30. But the company’s debt buying and collection unit, IDT Carmel, showed a rise in revenues and net income for operations in the quarter.

Newark, N.J.-based IDT (NYSE: IDT) has corporate interests that span many industries. The company’s largest source of revenue is its telecom unit, but it also has business lines in energy, prepaid cards, oil exploration, local media and accounts receivable management through IDT Carmel.

For the third fiscal quarter of 2008, IDT Carmel reported net income from operations of $1.9 million, compared to a loss of $3.3 million in the third quarter of 2007 and a $12.2 million loss in the second quarter of 2008. The debt purchasing and collection unit had revenues of $12.5 million in the quarter, up slightly from the $12.4 million it reported in Q2 2008, but up dramatically from the $1 million reported in Q3 2007.

IDT explained that the rise in year-over-year revenues was due to a change in revenue recognition accounting that took place in the first quarter of 2008. IDT said it switched its accounting for the Carmel unit from cost recovery to effective yield of the debt portfolio it purchases.

The debt buying unit saw its total receivables under management decline quarter-over-quarter, from $90.3 million in the second fiscal quarter of 2008 to $82 million at the end of Q3. The company explained that it did not purchase any new debt portfolio in the third quarter, a sharp contrast to the $344 million and $412 million in portfolios it had purchased in the last two respective quarters. IDT Carmel said that it sold two debt portfolios in the third quarter.

IDT Carmel was one of the few profitable units in the corporate-wide structure. Overall for the third fiscal quarter, IDT Corp. reported a net loss of $82.2 million, versus a net loss of $15.9 million one year ago. Revenues for the entire company were also down 6.6 percent to $453.2 million.