From The Sip Trunking Experts

TMCNet:  Vonage net loss narrows in 4th quarter, but customer retention remains a concern

[February 14, 2008]

Vonage net loss narrows in 4th quarter, but customer retention remains a concern

(Canadian Press (delayed) Via Thomson Dialog NewsEdge) NEW YORK _ Vonage Holdings Corp., which provides phone service over broadband lines, reported a narrowed fourth-quarter loss Wednesday as it scaled back on marketing and cut other costs.

Keeping customers happy is turning out to be the company's biggest challenge: three per cent of its customers cancelled service every month, a figure chief executive Jeff Citron called ``unacceptable.''

The percentage of subscribers cancelling, also known as churn, was up from 2.3 per cent in the same period a year ago.

``Most of the churn is self-inflicted as a result of the poor user experience,'' Citron said in an interview. He said the company was focused on improving customer care, and hired a new head of that department last week.

Vonage's fourth-quarter loss totalled US$11.1 million, or seven cents per share. Excluding charges for litigation and severance payments, the loss was six cents per share. Analysts polled by Thomson Financial had predicted a loss of 10 cents per share.

In last year's fourth quarter, the company lost $117.1 million, or 76 cents per share.

Revenue rose 19 per cent to $215.9 million from $181.5 million last year. Analysts were looking for $219.4 million in revenue.

Shares rose 11 cents, or 5.4 per cent, to $2.14 Wednesday.

Vonage added 56,000 net subscriber lines during the quarter to end the year at nearly 2.6 million lines. Subscribers connect phones to their broadband Internet connections through an adapter and pay $25 a month for unlimited domestic calls.

On a conference call, Citron said the company hasn't seen any direct effect of the troubles in the economy, but expects that a recession could actually help the company, since cheaper phone service is its main selling point.

The Holmdel, N.J.-based company spent $63 million on marketing, up slightly from the third quarter but down 34 per cent from a year ago. Vonage has been an aggressive advertiser online and on television, but has been trying to make its efforts more selective and effective, which appeared to be working in the fourth quarter: The marketing cost of acquiring one new subscriber line was $223, down from $306 a year ago.

Vonage also said it would restate its results for the second and third quarters of 2007. Stock compensation expenses were overstated by $14 million because of the departure of its chief executive and other personnel.

For all of 2007, Vonage lost $265 million, or $1.70 per share, down from a loss of $339 million, or $3.59 per share, in 2006. Revenue was $828 million, up 36 per cent from $607 million.

During the year, Vonage cleared some big clouds hanging over it in the shape of patent lawsuits from old-line phone companies. It settled with Verizon Communications Inc., Sprint Nextel Corp. and AT&T Inc. and a smaller technology company, paying more than $200 million total.

Business Writer Mae Anderson contributed to this report.

Copyright ? 2008 The Canadian Press

[ Back To SIP Trunking Home's Homepage ]

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.