Greetings, ladies and gentlemen, this is the conference call operator for the IDT Corporation second quarter Earnings Call. (Operator Instructions) I would now turn the call over to the company, please began.

Good afternoon. I am Jim Courter, CEO of IDT Corporation. I am here with Marc Oppenheimer, our COO; and Steve Brown, our CFO. We are here obviously to discuss IDT’s earnings during our second fiscal quarter ending January 31st. I want to thank you for joining us. Steve and I will begin by making some general observations on the quarter’s results, and then the three of us will be here to take your questions. Before we begin, I must obviously caution all those listeners today regarding any forward-looking statements that you may hear during the course of the conference call during both our prepared remarks and the Q&A period that follows the prepared remarks. We may make forward-looking statements either general or as you know specific in nature. These statements are subject to risks and uncertainties that may cause the actual results to differ materially from those which we anticipate. These risks and uncertainties include, but obviously are not limited to specific risks or uncertainties discussed in reports that we file with the SEC. We assume no obligation to update any forward-looking statements that we have made or may make or to update you on the factors that may cause actual results to differ materially from those that we forecast. Now, let’s get started. Our second quarter was a difficult one, and we are disappointed to be reporting a loss, particularly a loss of $60 million. Several things contributed to the loss. Some of them indicate problems in the underlying businesses we are working hard to correct, and others represent prudent, good, thoughtful investments that will herald more positive results in the future. I will briefly discuss the results from IDT Telecom and IDT Carmel, our litigation expenses, and then I will move on to the promise for the future…

Thank you, Jim. I am glad to be back on the call. As Jim touched on, as a result of the ongoing changes in the telecommunications industry, IDT is in a metamorphic stage de-emphasizing some of our historical operations and investing in new businesses that if successful can greatly enhance long-term shareholder value. As a result, as I discuss our second quarter financial performance, I will try to highlight and distinguish between the businesses which we are seeking to harvest remaining value, low growth businesses, and our potential high growth businesses. First and foremost, our core telecommunications business, our US pre-paid calling card business continues to be adversely affected by the unfair practices of many of our competitors, which has led – resulting damage to the industry as we have discussed in the past several quarters. That said, revenues did increase slightly quarter-to-quarter mostly due to the inclusion of the Christmas holiday season this quarter. We continued our fight to clean-up the industry spending over $2 million this quarter on legal, lodging and related costs, with the hope that our pursuit will allow us to regain market share. But, unfortunately, the performance to-date has not been overly encouraging. Our Wholesale Telecommunications business continues to show positive indications that our gross profit from third-party exceeding our expectation, as our performance has been somewhat negatively impacted by the decline of our US calling card business. Our Telecom gross margins and free cash flow continued to benefit from another cost reduction program, which has resulted in significantly lower connectivity cost, underlying facility costs, and CapEx spending. Our Consumer Phone Service division, which we have been harvesting for almost two years now, continues to generate good cash flow despite the continued attrition of our customer base. So, net-net, overall, the IDT Telecom sequential performance…

(Operator Instructions). The first question comes from Ms. Donna Jaegers with Janco Partners.

Hi, I have got a long list of questions, so I'll just go ahead on them, thanks for taking my questions by the way. You had $7.6 million of expenses in other expenses. Can you talk a little about what that is?

That's basically the net amount between how much our investments made in the market and how much either we sold at a loss or marking to market our investments.

And can you talk -- I know you guys have invested in hedge funds in the past. So, can you talk a little about your competition of the investment and what's in the marketable securities.

I would say about $100 million left in investment. As you see on the balance sheet that are tied into the market, it is relative within the ballpark with last quarter. You should think for the most part there was a strong effort to move to mature our investments and things that were at last exposure to the weakness of the market. For the most part the $100 million, roughly $100 million that we have in long term investments have not been affected significantly -- those have slightly been impacted by the market in the last few months.

Okay. And the marketable securities, what's in there?

Again the marketable securities is…

Is about $130 million or so?

Correct. Right, its things that are easily liquidated, again with very little exposure to market risk.

In this market that's rare, so can you give us a little more detail as far as what sort of marketable securities you're holding?

Hi, Donna. We've got a short duration portfolio of treasuries. We also have CDs with money center banks. The program that Steve talked about was an effort to remove ourselves and we've done this now over the last two quarters to remove ourselves from the exposure to the market and to make sure that we maintain liquidity. We don't have CDOs, we don't have mortgage banks. We don't have any of the exposure to the funky structures that or the auction rate swap. So we are looking at plain vanilla, which as we go forward you'll also see in a decreasing interest rate environment, less interest income but at least you get safety of principle.

Great, and I'll appreciate that. On the assumptions that you made on IDT Carmel for the bad debt to take the bad bet that right-off. Can you talk about what sort of internal rate of return you are assuming on that portfolio now? And how does the $60 million compared to what's the portfolio worth right now. Sort of just to put that in perspective?

Well, the portfolio on the balance sheet is at $90 million, that's after the write-down. The IRR is a blended IRR, because obvious there are a lot of portfolios, a substantial part of that asset came from the forward flow that we invested in. At the point where we already had enough experience and working that forward probably thought we won’t effectively get -- of course we got a rate. So while the general goal of Carmel certainly going forward is to get an IRR in the low twenties. The blended IRR for the existing portfolio is in the low teens.

Okay. And then on the lawsuits, I know your legal spending topped up a lot this quarter. TyCo is coming up I think that lawsuit is scheduled for April 8th or April of '08. Can you talk a little; is there anything that you can say to update us on that?

In litigation, you really talked about litigation for the reason mentioned, I don't know what the outcome is going to be; that also depends on the discretion of trier a fact and the trial law. But, generally speaking I can say that and I've spent sometime with our litigation team, I've spent sometime with our outside counsel on TyCo and other non-intellectual property pieces of litigation where we are the plaintiffs. We are very -- I can say we’re enthusiastic, very robustly enthusiastic that in this calendar year there is going to be a material cash windfall for IDT, but going on into anymore specifics I think would not be inappropriate.

Okay.

And just, I want to just amend that. I was startled a couple of times this week when I was getting briefed as to where we stand on a couple of pieces of this litigation. I mean they are interminable sometimes as you know, even at the trial level there is an appeal. There can be an appeal to the appeal and it can be appealed to a higher court and there can be motions that are granted appeals to motions. We are familiar with all that but on all three in the non-intellectual property, pieces of litigation, where IDT is the plaintiff with no real significant counter claims; it's looking quite good at the present time. That's a forward looking

Safe harbor

No doubt about it, but I wanted to get that off of my chest.

Okay. If -- Jim just besides Tyco, what are the other two losses that you guys are spending on right now?

It's non-intellectual property, one would be Morgan and the other would be Blackstone.

Okay, okay. And then on TuYo, is that under other prepaid and if so, it dropped pretty significantly. So, can you comment of all about what's going on there?

Steve, you'll answer that and I'll get some thoughts.

Yeah, basically we are disappointed with the results of TuYo. So, it's a business that's being monitored very closely right now. And I think it is part of what Jim wanted to address. Yeah, very specifically, we know about the fraud in the calling card industry, the prepaid calling card industry, we talked about the fact that that's one of the driving reasons, why our margins are narrow the profitability, it's not there, the revenue is going down. It just asked and there are a lot of these operations that are springing up, that are misleading, grossly misleading consumers and consumers asking, 1 million minutes for $2 to Dominican Republic, we'll buy that card and the faith was that. And they are doing all sorts of things to clean it up, I don't want to go into that right now. In TuYo, we're saying basically fraud and what is, and that is really a big issue that we're trying to work around. What is happening that the phone, the phones are great phones, they work well, the rates very good. We obviously need to be competitive or discounting the phones that made to pay let say $70 per phone. We sell the phone $30 at SAM'S CLUB or another outlet and embedded in the phone is the chip that has maybe 100 or 300 minutes of free calls that has presented for people to make a $33 purchase. And the fraud is the fact that there is a large consortium of people that buy these phones, they aggregate the phones, they disassemble the phones or reprogram the phones, they transship the phones to another country and that's why sold at $60 and the chips are sold to a discount on the street. So, fraudulent people are making money by stripping down the phones and we are working around that problem. And it's so significant that at times, we found that in some outlet it's between 50% and 80% of the phones are being stripped and fraudulently sold internationally.

Just from the P&L point of view, there are two portions of revenue; one the sales of phone, which we obviously sell as discount and then the possible path, which is the rechargeable minutes that they buy, because of what Jim mentioned and because we are trying to deal with that problem, we have not been as aggressive in selling the phones right now and that obviously a big portion of the reason why you see a dip in the revenue until we work the model to figure out how to prevent this happening in the future.

Understood, and one last question and then I'll turn the floor over to somebody else. On the wholesale business, there has been some speculation that you guys might be looking at maybe trying to monetize that. Can you comment at all on what your plans are for the Wholesale Telecom Business?

I'll comment not only for wholesale but for IDT and its history. We love building business, and that said if we think we can get a good price for our business, especially if it's a business that doesn’t look like it's a high growth business anymore and the cash flows from selling that business would be better than harvesting that business. And so this has been IDT's business philosophy to continue to monetize. So, if you are asking does that apply to wholesale, I mean it could because wholesale fits that non-high growth business. That said, we do believe in the long-term business, so we wouldn't look to sell it unless we think there is a phenomenal price on the table.

Okay. Great.

Just adding to that Donna. The wholesale continues to perform really well. It's on budget; it continues to, you'll see with the Q and the detail in it, the metrics. And we are actually really pleased about it.

Okay Great. I'll turn over the floor to somebody else. Thanks for taking my question.

Thanks, Donna.

Thank you. Our next question comes from Mr. Clay Moran with Stanford Group. Mr. Moran, you may state your question.

Thanks. I have a few questions also. Did you mention on the oil business that you were looking to invest $50 million? Did I hear that right?

Let me jump into that, we have spent when we purchased our 75% interest in EGL, which is a group, its not just one company there are various investors and they have had probably together 120 years of experience in the oil and gas business in the State of Texas. On top of the $2.5 million we’ve put another $1 million for investments in operations et cetera. We anticipate spending over the next few years, an additional $45 million -- $47 million. So we are looking at $50 million. The real question is will that get us to prove to the Governor of Colorado and the President of the Untied States whomever he or she is going to be a few years from now, that we have developed a technology to extract the oil and some gas in a commercially, economical way that has least environmental impact. We believe we are thinking of this thing for a big strategic standpoint. We believe that Americans will come to the realization very quickly that $107 a barrel is soon going to manifest themselves in selling off the car for over $100 and they are going to start looking realistically at the fact that we are exporting almost a $1 billion a day to buy foreign oil. And we in oil shale have three times as much oil as all of Saudi Arabia. So let us buy American, let us produce oil here in this country. It can be done more cheaply, it will help our strategic economic situation and reduced our balance of payment deficit by 50%. We'll spend far less on military operations in the Middle East because the increasing price of oil I think America will turn to the realization that we have trillions of barrels of oil in a different form, right here in America and its time to exploit our own natural resources and in an environmental friendly way. So we think this is the long-term play, but we think its well worth it for IDT, our shareholders and the United States of America.

Well put Jim, I just wanted to make sure as to clear the $50 million is a budget commitment it’s not a hard commitment. So if anything happens over these few year periods, the impairments, its not worth putting down much money into this we have that flexible, we don't have any commitment. That said, if things pan out as Jim has said we will as and we hope that will and we think they will, then it would be a very wise investment.

So that's over say two to three year period the $50 million?

No, actually the $50 million is over a 10 year horizon. Over the next two to three years we are looking at a commitment of approximately 10 million assuming that the programs continue.

Okay, on the "Made in the USA" initiative. Do you have a URL secured for that at this point? And do you have any sense of how you'll market it, how much you will spend on that marketing?

Its way too preliminary to talk about it. We are not talking about a significantly fresh investment. We have from our internet businesses we have some great marketing geniuses who understand internet marketing. We're going to leverage on that. It's most likely to be a low cost initiative, but some of the research and that's why we got very excited about it, Jim. Some of the early research done by our internet [Goggles] pointed out there is a good market for this. But again it's too preliminary to talk about right now.

Okay. Any sense of when you'll have more specifics there or when that will be launched?

I'll say by the end of our fiscal year.

Okay. Since there was an earlier question on selling the wholesale business and your consideration of possibly doing that or if you ever were to consider it, would you sell it without the prepaid business tagging along with it, and if you were would that have a significant impact on the prepared margin?

Clay that totally depends on at the time what the telecom configuration looks like, who the third party is, because it’s going to be hand in glove. Certain parties will want certain assets to be included with that, others won't, so once that is really a future event, you can't really know about that right now.

But do you think that its so, you say it’s hand in glove. The two really do go together though its not there?

They can go together -- it depends on the need, so exactly.

Okay. How about your standpoint though. I mean does the wholesale business really help out your prepaid business as you operated today?

Again, if we would do a deal to sell the wholesale business and if the retail business is curved out we will have to look at the affect on the retail business as part of course of doing the sales. So, there are just so many variables to talk about and there are so many ways to go, but obviously we look at the whole picture.

Right.

But they are not joined at the hip, it depends on the perspective purchases, what their strengths and weaknesses are and these two transactions could in fact be bifurcated depending on the detail.

Okay. One more question, you have several new initiatives on top of what just a couple of years ago, when new initiatives such as the energy and the collections and as such, do you fear all at that you're stretching yourselves to thin?

Let me start and I will have my colleagues amend my statement. That's something we talked about all the time and basically we look at depth of management and the time that we need to spend about things and also the limited amount of reason although relatively in good shape from my balance sheet standpoint. We are always looking at what type of cash investments we can prudently make. I think you'll see us being very careful. We're not going to start something new for the heck of it because it fits my fancy or have it fancy. We're going to spend sometime researching the opportunity. We'll do due diligence on the company, we may start something new, but I think over time you'll also be finding that as Steve says, when the time comes and if the time is right, something is always worth more to somebody else and is to us. And so, over time we will be a company that we can control and manage. It's not going to be out of control and if we find three or four new businesses next three to five years, probably I'm just guessing, it's another forward-looking statement, we will have sold three or four or five businesses during that same period of time.

And just to add what Jim has said, management is very focused in the four business lines that we discussed on this call, which whatever everything is going to be an offshoot of existing telecom business, of the energy businesses, of the debt collection business or the internet initiatives. I think we have an excellent management team at the portfolio level at all those four units. And there is infrastructure in all those four units to evaluate what's in those units. We don't have management to start a new unit right now, the amazing opportunity came, we are always entrepreneurial, but right now the focus is within those four units.

And the other thing [Clay] you also have to remember the issue of staging. Some of the businesses, our businesses that are about to go into cash flowing mode, others are businesses that won't go into that for a few years and there are other businesses yet that in the portfolio that are never "going to be cash flowing businesses". Those are going to be monetization assets and it's like an air traffic controller. You are going to have planes all at different stages, some on the ground, some on the approach, some in the air, some taking-off.

Okay. And, I don't know if you can answer this, but the monetization asset that peaks my interest, can you tell us which ones you would identify as not really cash flow opportunities, but more opportunities to sell as assets down the road?

You've got as an example in the internet mobile group. You have businesses that historically have been monetized based on number of eyeballs. You can look it as an example it's not that its edge is on the block it's not, we are happy with it. But you can use that as an example that’s the rapid growth that’s had in adding subscribers and you look at the metrics, it's been quite astounding. If you look at the number of '06 the usage were about $3 million.

You mention that would grow, is that…

Yeah but I'm saying as it grows..

Okay. I see these things, so these are high growth initiatives that you think would be better some more else and be more valuable to somebody else.

That's correct.

Okay thank you.

Okay.

Thank you. Our next question comes from [John Mellow] with Barrington. Mr. Mellow, you may state your question.

Hi guys.

Hi

I was wondering if you could talk a little bit about the $363 million in income taxes payable, what was that in regards to and could any of your deferred income tax assets be used to offset that? Thank you.

Again we always get questions on these -- understanding income tax exposure is very difficult but it's very detailed, so the first thing, as always we refer you to read our 10-Q and all the language as require under FIN-48. That said if you want to make life simple just take your liability and subtract your asset from it and call that a net tax liability I don't think that would a [dead weight] to go.

Okay. And what was the liability of result of operations or was that the result of the monetization of the business or…?

It's based on past profits of the company.

Okay. All right, thank you.

Thank you. Your next question comes from [Melon Soprano with the Melon Soprano Web Group].

Hello. Thank you very much for making yourselves available. I have a couple of questions. My questions are regarding original content for distribution, content with an added entertainment value. IDT has stated publicly that the new Internet Mobile Group division will be responsible for the acquisitions around net and [incubation] of internet and mobile content. You had success with IDW Publishing being able to monetize off some of the intellectual properties like the 30 Day movies (Inaudible). My first question is outside of Zedge, you just appended material, what other steps is IDT taking in the US space to produce additional types of original content, not just comic books but specifically content for an online audience products such as music or ringtones and original TV programming.

Yeah, one of the great things about creating an online community is that we don't develop the content. We market the opportunity so that community members would go on and offer their content. I think this is the model that has been very successful with YouTube and MySpace and obviously it helps to reduce cost and actually create a [vital] excitement. So, I mean, if you have specific ideas from the business side, you can always contact the executive at Zedge and go on Zedge.net and offer your side of ideas, that’s all part of creating the mobile internet community.

Have you studied other models that you in fact developed original programming and doing so create online ad revenue models like [Riteco] have been very successful.

Yes we have studied. It does require a tremendous amount of cash investment that at the present time - I mean there are two things we don’t want to lose focus of what we are succeeding at and as the communities grow then we will look at other opportunities and what to do with the registrants. But yes we have studied and at the present time we want to work within the existing budget.

A follow up question is regarding the Zedge group. You mentioned some numbers I think it was $2 million for quarter loss. There was very little ad revenue is that correct?

That’s correct.

And you also mentioned $1.6 million loss from the Internet Mobile Group. Can you explain that?

The $2 million Zedge is a standalone business. The $1.6 million is after the -- from the other components such as the IDW Publishing Company which is profitable.

And considering that there is very little ad revenue coming in from Zedge, is there room in the budget that it has new business models which might yield great online net revenue more than what is coming in now?

100% and the again I would add that; that’s probably my background is from accounting. I am not sure I am the best person to talk about ideas, but if you want to call after the call talking to investor relations I will hook you up with the business people there, I am sure they will love to talk to you.

Okay. My next question is, in the previous conference call in Q1, 2008 it was mentioned that IDT would be making strategic investment migrating from a commodity and servicing model to more of an “enabler of technology”. How attractive are the other CDN models such as like Akamai, CashFly CD network are strategic in a sense and is that an example of what you mean by enabler of technology because it seems to go hand-in-hand with these type of Internet Mobile Groups.

It not just the concept of the Internet Mobile Group Mr. Soprano, it’s also the concept of the margins. If you look at having proprietary IP versus an example of selling a pencil, unless it's a very special pencil your margin is going to be very narrow. Whereas if you've created something, if you hold the patents, if you have proprietary technology or ideas or you are the gatekeeper that enabled people to either communicate deals with each other any variety of median you can charge a greater amount there and just by selling a commodity which it.

My next question actually has to deal with the, which you kind of just touched on which is the value of the pencil and whether if that something that people really want, you mentioned -- looking at IDT is more -- you mentioned earlier in the phone calls looking at IDT is more than a telecom company due to the energy emerging businesses. Do you think that IDT will be the first teleconference company ever in the house of wholly owned music production and music publishing licensing company under its umbrella, before the Sprint Records or Verizon Music Group to directly reproduce on pencil mobile flash wireless platforms?

I don't where they are. I don't know where some of these telecom conference companies are going. You know what we are doing and we are think we are on cutting edge, we have done some interesting things at telecommunications company, Steve Brown was the Chairman of the Board of IDT Entertainment, which we sold for a very nice profit to Liberty Media, so.

Because 187, 185?

Actually I mean, it entertains that for example I can just jump in, that's an example of business that we invested $200 million, we sold close to evaluation of $500 million and it is not because we wanted to sell, we wanted to build it out to $1 million, but somebody was giving us an attractive price at that time, you look the amount of cash investment. So if you look at the history of IDT, yeah, we are a Telecom Company, but if we have a great management team in place, we can build something of great enterprise value. We're going to exploit that team and that business model.

I think that's a really great attitude because I have just spoken to -- I approached another company about that concept of producing original content directly to the mobile wireless platform and they said nobody is really dependent there, the record labels, license of content directly through the telecom provider and telecom providers distributed. But there is really no telecom provider at this moment that is producing content directly for the mobile content (inaudible) smart phone that licensing and content estimate as well the artistic value of that pencil.

Okay. I'm sure our team will love to talk to you. I don't its appropriate really to discuss that on this call.

Okay. Let me have a couple of other questions. Are you considering the same demographic and international for the prepaid product in the same growing sector that down loads content in Spanish. What steps is IDT taking to deliver news Spanish content with other several from the (inaudible) market?

The prepaid, I'm not fully sure, but to add, but in the prepaid calling card business, which we do have a great distribution days that we can sell our product to hundreds of thousands of across the United States. We look across the market unsuccessfully over the years. And basically our -- I'm not saying that we can't do it in the future and if you go back to the entertainment days and we look for products to sell there and the reason the prepaid calling card works because it takes very little shelf space. So, I don't think there is any synergy right now. That said, I do know that a number of the people, who work at the distribution company have been sharing certain ideas with the people at Zedge, but again way too preliminary.

Do you have high profile celebrities with their own prepaid calling card that are boosting revenues?

We tried that a long time in the past and right now we're not using it because the product basically speaks for itself. The consumers are very educated consumers.

We have tried -- as Steve tried, we tried from families closest to the pope. and it seems like people just buy the stuff as they buy IDT product, because it’s cheap and it works. They don’t – they sell tickets to ball games or spiritual involvement, but they don’t seems to sell calling cards.

At this time we have run out of time. This concludes the question-and-answer session and today's conference call as well. Thank you for your participation. You may now disconnect.