LIFE ON THE STREET

Are you one of those people who is looking for the next big thing on the stock market? Are you trying to figure out which one of those flighty Internet stocks will be the next one to capture enough hype to surge through the stratosphere for a week or two?

Or instead of riding that kind of roller coaster, are you more interested in a long-term play? How about something like a nice, stable telco stock that has some room to grow?

Very few publicly traded companies can offer investors the best of both worlds. Occasionally, certain Internet stocks drift back to Mother Earth by acquiring relatively stable trading ranges but still manage to maintain very high valuations. Likewise, certain phone company stocks, mostly those that can be identified closely with the Internet or with hot technologies such as DSL, sometimes manage to connect with the buzz that so strongly influences the throngs of private investors.

For the most part, however, stocks from each of these worlds find it difficult to build a bridge to the other. With that in mind, it may be time to take a good look at IP telephony stocks.

For most of their short lives thus far, IP telephony companies certainly have fit the bill as high-risk investments. Since early on, their profit margins have not left much room for error. Also, many started with a clear emphasis on cheap long-distance without much emphasis on quality or reliability. In those days, just about anybody who could cover the costs to provide a few users with gateways could be considered an IP telephony service provider, and it wasn't clear who among this crowd was willing and able to take the next step to becoming a successful business operation.

The IP telephony business has, of course, changed for the better since those years. Many IP telephony service providers have been able to supplement their raw voice minutes with other applications, while technology quality has improved and the providers have begun to think strategically about network management.

In addition, several of these providers have developed key relationships - both with Internet companies and traditional telcos.

Could it be that these IP telephony providers, once small and struggling, could be the key for those investors hoping to find the best of both worlds?

The recent initial public offering of Net2Phone (spun off from IDT Corp.) cast a ray of hope on this possibility. Its stock climbed from a first-day price of $15 to more than $70 per share by early September. Others are still to come. For example, iBasis (formerly VIP Calling) has filed for an IPO, and a few other big names are said to be close to filing.

Such companies, among the more successful in the IP telephony realm, are as buzz-worthy as most Internet-related companies but carry more of the long-term promise that telcos carry, especially as the public switched telephone network is increasingly modified to accommodate their traffic.

The IP telephony companies may not resemble America Online or AT&T in so many ways, but arguably they have a much more solid foundation and a more predictable future than the next virtual shopping mall or business-to-business portal.