INGATE

From The Sip Trunking Experts

TMCNet:  Vonage posts smaller 2Q loss, but subscriber recruitment stalls

[August 09, 2007]

Vonage posts smaller 2Q loss, but subscriber recruitment stalls

By PETER SVENSSON AP Technology Writer
The Associated Press

Internet telephone company Vonage (News - Alert) Holdings Corp. on Thursday reported a much reduced loss for the second quarter as it scaled back marketing, but it also saw a drastic drop in new subscribers.

The drop in recruitment means that Vonage is no longer the country's largest provider of Internet-based telephone service, a field it pioneered. Cable company Comcast (News - Alert) Corp. reported 3 million digital phone subscribers at the end of the second quarter, surpassing Vonage's 2.45 million, an increase of just 57,000 lines from the first quarter.


The Holmdel, N.J., company is struggling in court with another old-line telecommunications company, Verizon (News - Alert) Communications Inc. In March, a jury found that Vonage infringed on three Verizon patents. The judge barred Vonage from signing up new customers, but that decision has been stayed while an appeals court considers it. In the mean time, Vonage is trying to work around the patented technologies.

Vonage posted a net loss of $34 million, or 22 cents per share, for the April-June period, down from $74 million, or $1.16 per share, in the same period last year.

Excluding one-time charges, Vonage lost $18 million, or 12 cents a share, substantially better than the average analyst estimate compiled by Thomson (News - Alert) Financial at 34 cents a share. Analyst estimates generally exclude charges.

Revenue came to $206 million, $2 million short of analyst expectations but up 43 percent from $144 million in the second quarter of 2006.

Vonage, which once blanketed the Internet with its banner ads, spent $68 million on marketing in the second quarter, down from $91 million in the first quarter. However, it got less for its money: the market costing per added subscriber rose by $14 to $287.

Vonage's interim chief executive, Jeffrey Citron, said a more focused marketing effort has reduced the cost to about $250 per subscriber in June and July, and the company expects that cost level to be sustained through the third quarter.

Rather than focusing on building the Vonage brand, Citron said, the company is now directing its money to where it's most likely to recruit subscribers. For instance, its Web ads are now only showing up on the "highest-performing" sites.

Citron also said he expects subscriber additions to rise in the third quarter as new marketing initiatives take hold.

"I believe we're turning the corner on one of the most difficult periods of Vonage's history," he said.

The business of selling Voice over Internet Protocol service, or VoIP, independently of cable and phone companies has looked increasingly shaky in recent months. Vonage's legal troubles have no doubt scared off some potential subscribers. In July, rival SunRocket (News - Alert) abruptly shut down, stranding more than 200,000 subscribers.

On June 30, Vonage had cash reserves of $344 million, down from $410 million three months earlier. Of the total, $66 million were tied up as collateral for a bond tied to the Verizon patent verdict. The company said it expected its "cash burn" to decline in the third quarter.

___

On the Net:

Vonage Holdings Corp.: http://www.vonage.com

[ Back To SIP Trunking Home's Homepage ]

Loading
Subscribe here for your FREE
SIP TRUNKING enewslettter.

Featured Partner


Featured Whitepapers

SIP Security for the Enterprise
Voice over IP (VoIP) is incorporated into a variety of computer networks, both public and private, and used for everyday transactions and communications among carriers, businesses, government agencies...

Making A Broadband Purchase Decision
Businesses today have many options for broadband connectivity. Clarifying your particular business needs prior to selecting a broadband provider will ensure an optimal match of broadband service to your requirements.

Voice-Optimized Network Delivers Premier Call Experience
Customers equate call quality with business quality. Real-time communication, interpersonal interaction, and the cordial tone of a call center representative can create a positive impression of your business that no email can match.

Featured Case Studies

Business Telecom Expenses Reduced 50%
A small to medium sized company in the midwest was interested in migrating to IP Communications, but in today's economy, they were hesitant to upgrade their communication system due to their perception that the cost would outweigh the benefits.

Multi-State Company Cuts Telecom Costs 50%
A multi-site, multi-state company with extensive monthly long distance fees and toll-free charges did not have adequate broadband for Broadvox SIP Trunking requirements, nor did they have a SIP enabled telephone system.

Discover Leisure Connects Remote Users to its IP-PBX
Discover Leisure is one of the largest resellers of caravans and motor homes in the UK. With 15 branch of?ces all over the country, the company spent a great deal of money every month just on internal phone calls.

Featured eBOOKS

Internet+: The Way Toward Global Unified Communication
Connecting the telephony of the enterprise PBX or Unified Communications (UC) system using SIP trunks instead of conventional telephone lines has been very successful in recent years.

What is SIP Trunking? Edition 2
SIP trunking is becoming more of a focus for service providers. One key issue many service providers face when deploying SIP trunks is NAT, or Network Address Translation, traversal.

What is SIP Trunking? Edition 1
A vast resource for information about all things SIP - including SIP, security, VoIP, SIP trunking and Unified Communications.

Featured Videos

Broadvox VAR Testimonial VAR 1:
Part 1 of the VAR (Value Added Reseller) Partner Program Testimonials for Broadvox...

E-SBCs AS The Demarcation Point:
Ingate's Steve Johnson talks to Erik Linask about the role session border controller plays as the demarcation point at...

Demystifying DPI
How can deep packet inspection protect your SIP traffic as well as your entire network?

Featured Resources

Partner Program Overview:
Over 4,000 VARs, Master Agents, Solution Providers, and Independent IT Professionals trust Broadvox. We offer customized services and solutions to fit seamlessly into any company's business model. And when you partner with Broadvox, every member of our team stands behind you and your customers 100%...

SIP Trunk UC Summit

What's New

Presenting the New Ingate/Intertex Website:
Internet+ is an extended Internet access allowing high quality SIP (Session Initiation Protocol) based real-time person-to-person communication, everywhere and for any application. It applies to both fixed and mobile networks ...

Featured Blogs

Featured Webinars

Secure SIP Trunking:
What You Need to Know

Successfully Deploying Enterprise SIP Trunking:
Tools and Techniques for Overcoming Common Roadblocks

Featured Podcasts

Getting the Most Out of Your SIP Trunks:
Ingate's Steve Johnson and TMC's Erik Linask discuss how best practices forgetting the most out of SIP Trunking services and common pitfalls to avoid.

Featured Datasheets

Ingate SIParator E-SBCs
Adopting SIP is a simple process with the Ingate SIParator, the secure enterprise session border controller (E-SBC). The SIParator makes secure SIP communications - including VoIP,SIP trunking and more - possible while working seamlessly with your existing network firewall.

Ingate Firewalls
Everyone is talking about enterprise usage of VoIP, instant messaging and other types of realtime communications including presence and conferencing.

SIP Trunk Solutions for Service Providers
The award-winning Ingate Firewall and Ingate SIParator deliver a high quality, reliable SIP trunk connection between the customer's IP-PBX and the service provider network, and solve interoperability issues to simplify deployments and support for remote diagnosis of reported issues.