Growing Pains Widen Net2Phone’s Losses

Net2Phone Inc., which sells Internet telephone service, said its fiscal third-quarter loss widened to $11.4 million, or 21 cents a share, from $830,330, or 3 cents, a year earlier, as costs of attracting customers increased. Analysts on average expected a loss of 22 cents.

Revenue more than doubled to $18.9 million from $9.04 million. Sales and marketing expenses rose more than sixfold to $11.1 million as the number of customers increased. Net2Phone had more than 825,000 customers at the end of the quarter, up 43% from the second quarter.

Shares of Net2Phone rose $1.50 to close at $29.50 on Nasdaq, before the results were released.

The company’s expense for issuing options was $4.37 million, up from zero a year earlier. It did not provide a final loss figure for the latest quarter.