Vonage Loses Subscribers but Does Anyone Care?

Feb.26.09 | About: Vonage Holdings (VG)

Is anyone still bothering to pay attention to Vonage (NYSE: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.

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