Net2Phone Jumps After Inking Deal With CompuServe

Updated from 11:37 a.m. EST

Shares of Net2Phone (NTOP - Cramer's Take - Stockpickr) rose sharply Tuesday after CompuServe announced that it had agreed to offer Net2Phone's Internet telephone service to its 1.2 million U.S. members.

Under the agreement, Net2Phone will be the exclusive provider of Internet telephone service for CompuServe, an Internet service provider owned by America Online (AOL - Cramer's Take - Stockpickr), for at least a year.

By late morning Tuesday, Net2Phone's stock was up 9 1/4, or 15%, at 72 3/8. (Net2Phone finished up 3 7/8, or 6%, to 66 3/4.)

The financial terms of the deal were not disclosed. Neither company would comment beyond CompuServe's statement because Net2Phone is in a "quiet period," imposed by the Securities and Exchange Commission, before its secondary stock offering. The Internet phone company filed to sell 6.3 million shares on Nov. 4.

Net2Phone provides Internet telephone service, with calls made over its Internet protocol network either through personal computers or phones.

CompuServe will supply prepaid and post-paid phone cards that would enable its customers to make calls worldwide at reduced rates.

Net2Phone reached a similar deal with ICQ, another subsidiary of AOL, in October.