Stock Watch: AT&T Deal Boosts Net2Phone

Net2Phone (Nasdaq: NTOP), which offers online telephone services, may seem like a widely overvalued stock that is climbing largely because of momentum trading, but you have to admit that the company is announcing a lot of significant news. On Tuesday, Net2Phone — which announced partnerships with Sprint and Compaq last week — got a boost in the stock market after AT&T (NYSE: T) announced a five-year deal to provide networking services to Net2Phone.

This deal is probably a bigger victory for AT&T — which expects to make $100 million in revenue from the contract — than Net2Phone, but investors obviously saw things differently. Shares of AT&T closed down 1 to 45 on Tuesday, while shares of Net2Phone rocketed 12-3/8 to 85, a gain of more than 17 percent.

Anybody watching this stock in the past week knows that Net2Phone is extremely overheated right now. When you a see a trading pattern like this, it’s pretty much impossible to know when the piling on will end. Questionable valuation aside, this stock could get even hotter.

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