For telecommunications firm


(IDT) - Get Report

, the collapse of



could be the best thing that ever happened to it.

New Jersey-based IDT offered to buy WorldCom's MFS and Brooks Fiber units Wednesday, as well as the consumer and small-business arms of its MCI long-distance unit, for the bargain-basement price of $5 billion.

Whether the bid will be successful remains to be seen. WorldCom has not yet responded to the offer, and Kaufman Brothers analyst Vik Grover said the bid has "more bark than bite." Still, IDT has been successful in scooping up other distressed telecom assets over the past year.

Flea Market

In December the carrier acquired Winstar Communications for $42.5 million in cash and stock, and it also took control of Teligent after that company filed for bankruptcy.

With about a $1 billion in cash and a market capitalization of $1.25 billion, IDT is hoping the purchase of WorldCom's assets will propel it into the big league.

"If IDT were able to get local and long-distance assets as well as MFS and Brooks Fiber, it would be a huge coup for the company," said Rick Black, an analyst at Blaylock & Partners.

Black doesn't expect that to happen, however. He said WorldCom's banks will demand the MCI and UUNet units as well as international assets as collateral for any financing they provide. "For the banks to give that up is definitely far-flung," he said.

Even if the bid is unsuccessful, IDT is proving that is a force to be reckoned with. While other telecom firms have fallen off the radar screen in the last year, IDT has seen its share price climb about 20%.

Mixed Financials

In its most recent quarter, the company said revenue rose 19.6% from the same quarter a year ago while losses narrowed to $42.8 million from $55.6 million. The firm, which has just $54 million in debt, is expecting to see sales climb 12% to $1.4 billion in the fiscal year ending July 1.

As for the Winstar business acquired last year, it posted a loss of $43.9 million in the third quarter, but the company said it has implemented a plan to reduce the cash burn rate and expects it to return to profitability by mid- to late 2003.

That said, IDT did post a loss of $433 million after asset writedowns in fiscal 2001, and while the company has plenty of cash, most of that has been generated from its sale of Net2Phone, not from internal operations.

IDT sold Net2Phone to AT&T for $75 a share two years ago and subsequently bought money-losing Teligent to avoid paying some $550 million in capital gains taxes.

IDT hasn't detailed how it would structure a deal with WorldCom but has said it may include other financial and telecommunications parties as partners in its offer.

"IDT believes that prompt consideration

of its proposal by WorldCom would help prevent further loss of customers and deterioration in value of both these business units," the firm said in a statement.

IDT fell 2% to $16.14 Wednesday, but WorldCom's stock zoomed 150% to 25 cents.

WorldCom's stock has fallen 99% this year, and the company now faces potential bankruptcy after warning that it had overstated EBITDA by $3.8 billion over the last five quarters. In a press conference Tuesday, CEO John Sidgmore said WorldCom was working with its banks to restructure its finances.