Free phone calls for Microsoft IM customers

MS and Net2Phone entered a deal to offer free phone calls to users of Microsoft's instant messenger service -- beating a similar AOL deal by a penny

Microsoft said Thursday it entered a deal with Web telephony company Net2Phone to offer free phone calls to users of Microsoft's instant messenger service. Financial terms of the deal were not released.

Net2Phone's computer-to-phone technology has been integrated directly into Microsoft's MSN Messenger, which allows users to send instant messages to other users and hold "conversations" online.

With the Net2Phone addition, users will need a sound card, microphone and speakers to also make calls while online.

Net2Phone is planning a similar service for Microsoft rival America Online, the Wall Street Journal reported in Thursday's electronic edition. But the AOL-linked service would cost users one penny per call, the Journal said.

AOL and Net2Phone have been partners on other projects, including investing in electronic messaging company Webley Systems in April. AOL currently holds a minority stake in Net2Phone.

Shares of Microsoft closed on Wednesday at 73-1/8, off a year high of 119-15/16 but up from a low of 60-3/8. AOL closed at 59-5/16, off a high of 95 but up from a low of 38-1/2.

Net2Phone shares ended at 38-3/8, up from a low of 15 but off a year high of 92-5/8.

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