Vonage Loses Subscribers but Does Anyone Care?

Is anyone still bothering to pay attention to Vonage (VG)?

It doesn’t look like it. The voice over IP phone company Thursday posted Q4 revenue of $222 million, up 3% from a year ago. Vonage lost 26 cents a share in the quarter, but noted that it posted an operating profit of $2.8 million, its first quarter in the black by that measure ever. However, Vonage lost a net 14,700 subscribers, to finish with 2.6 million lines in service.

Wait, wasn’t VoIP supposed the change the world, and crippled the Bells? Well, it certainly has made a dent, but the damage is being done largely by the cable companies, rather than Vonage. Clearly, Vonage continues to struggle against the ability of key rivals - in particular, cable - to bundle voice with other services. Compare Vonage’s performance in the quarter with, say, Cablevision, which today reported 53,400 net voice subscriber adds in the quarter, increasing its total to 2.8 million.

Thomson now lists just one analyst as providing estimates on the company; as the company’s market cap has eroded, the Street has abandoned ship. Vonage now has a market cap of just $64 million, which is less than its cash, marketable securities and restricted stock of $86 million. (But keep in mind the company also has $194 million in debt.)

VG Thursday was up a penny at 40 cents.

Original post

Comments

[junkyarddog:]

I've been using Vonage since 2005 and I'm extremely happy with their services.

I do have the option to switch to VoIP from my cable company, but Vonage does offer more benefits at a lower price. I hope Vonage manages to stick around.

I wouldn't buy their stock though...

Feb 26 01:02 PM

[Marcap:]

I have also used Vonage since late 2005, and have no complaints about their service. It has been excellent. And I find their prices to be very competitive. But as Junkyarkdog stated, I would not buy their stock.

Unfortunately, despite the large amount Vonage has spent on advertising, they just could not build their customer base to a point where they could make a profit, and from what I can tell, both their cash and options appear to be running out.

But to answer the question...Does Anyone Care? Yes, I care! There are alternatives of course, but they all cost more for the same features and options.

Feb 27 02:34 AM

[Wall_St_Geek:]

Perhaps the largest opportunity here is for an acquisition by Verizon or one of the other telcos. At this level, and with the current assets/debt, it may be an attractive target. I don't see a cableco buying it because of the distribution of their customers, but with 2.6 million subscribers, that's a decent revenue stream that could be acquired.

Feb 27 09:09 AM

[Marcap:]

I agree! Vonage is indeed in an excellent position for a potenial acquisition. And it could all be done virtually transparent to the customer. After all, the only things which would need to be changed are the re-routing of Vonage switch/router MAC numbers, and of course customer billing info. To the customer is would be no different than if Vonage simply changed its name.

On Feb 27 09:09 AM Wall_St_Geek wrote:

> Perhaps the largest opportunity here is for an acquisition by Verizon
> or one of the other telcos. At this level, and with the current
> assets/debt, it may be an attractive target. I don't see a cableco
> buying it because of the distribution of their customers, but with
> 2.6 million subscribers, that's a decent revenue stream that could
> be acquired.

Feb 27 11:13 AM

[waldipup:]

I switched to Vonage because it offered phone service cheap.

Now I can get pretty close to its cost from traditional carriers.

Its price advantage has narrowed significantly , making customers more likely to choose a package from a cable /phone company instead.

Mar 02 09:09 AM

[Desi:]

Hello,

Like everybody else I have been using Vonage since 2003 and I am quite happy with Vonage. The only additional point I wanted to add was that it would be interesting to understand the Vonage Subscriber composition. Vonage is very popular with the immigrant community because by taking two lines (as long as the home country can support the internet band-width of 256KB) the subscriber can cut his overseas telephone bills to almost negligible.

So there is a catch 22, if lot of the 2.6 millions subscribers represent actually a single user ordering two lines to support his overseas family then the real number will be lower. But if they get bought out then the big Telecom companies have opportunity not in grabbing current Vonage subscribers but if they decide to start overseas operations they will also get the loyal customers overseas.


Desi

Mar 02 09:17 AM

[User 371871:]

The only people who care are the folks like me trying to get refunds back for cancelled accounts. All potential new customers should run, not, walk as fast as they can from Vonage. And remember, if you are suicidal enough to pick Vonage, make sure you use a credit card so you have someone on your side. Vonage does not understand "Check 21" law and there are ton of gotta's in the signup process which can not readily accessed when signing up.

The reason it is losing customers is because signing up is impossible as customer supprt is as rude as possible and they refuse to actually help customers. It would do Vonage a ton of good to downsize as it actually needs to fire most of its customer service reps and its management as it management obviously supports this corporate culture. Investors should insist that Vonage clean house as soon as possible or they will keep losing money too.

Mar 08 08:16 AM

[InspectorFox:]

It's time for an unethical company like Vonage to be delisted...
Has anyone ever tried disconnecting your service from Vonage? Try it and they will make you pay through your nose until it bleeds.
Investors have already lost lot of money on this piece of junk. I don't see the point why it's still being trading when it's not even able to maintain the cutomer churn rate. I think the consumer have much better option now and they are adopting newer players in VOIP like Ooma which cost under $200 upfront and you never pay a dime for the lifetime of your service. I have only seen positive reviews for them on Costco, Amazon, J&R and other online retailers. It's time to let VG die and RIP...Amen!!!

Mar 26 02:44 PM