Net2Phone Shuts Down Aplio Subsidiary

Web telephony firm Net2Phone, Inc. has discontinued operations at its Aplio subsidiary, a move that will cost the company $53 million in asset write-offs.

The shutdown of the Aplio subsidiary comes less than a year after Net2Phone acquired the Paris-based company.

Last July, Net2Phone shelled out an undisclosed amount of cash and stock to buy the company , which gained recognition for building the Aplio phone, which looks like a normal telephone but connects over the Internet for free calls.

Most of Aplio’s 35 employees have been laid off and Net2Phone expects to record an additional charge in the fiscal fourth quarter related to those employee terminations.

In a filing with the Securities and Exchange Commission (SEC), Net2Phone said it wrote off substantially all of Aplio’s intangible and fixed assets as their values would not be recoverable.

In addition to the $53.0 million in asset write-offs, Net2Phone said it would swallow approximately $13.5 million of accruals for payments due under Aplio contracts.

The Aplio shutdown comes as the New Jersey-based Net2Phone recorded third quarter losses of $119.3 million ($2.06 per share share), much wider than the $15.8 million (30 cents a share) loss posted in the same year-ago quarter.

The losses include $66.5 million in restructuring and other charges and the cost of issuing free minutes to Web telephony customers.

To make up for lost advertising revenue, Net2Phone has stopped offering free PC-to-phone calling from its Web site and has renegotiated agreements with Yahoo! and Microsoft to scrap free calling from instant messaging applications.

Both Yahoo! and Microsoft now charge for phone calls routed over Net2Phone’s IP network.