Yesterday Vonage reported its Q4 loss narrowed to $65 million, or $0.42/share, compared to -$72m last Q4, on revenue growth of 90% to $181m, which just beat the Street's estimate of $180m. Investors however, took notice of the firm's first quarter-on-quarter decline in subscribers to 166,000, versus 204,000 in Q3, and consequently sold off its shares by 9.25% to new closing ($5.30) and intra-day ($5.25) lows since its IPO last year. At year-end 2006 Vonage had 2.22 million subscribers, compared to 1.27m in '05, but an analyst with Soleil Securities says the quarterly decline in subscribers is a "huge concern" because, "The business model only works if Vonage gets to a sufficient scale. They need four or five million customers before the profits get interesting." Vonage said it expects 2007 revenue of $850m to $900m, or at least a 30% increase over last year. Analysts however, were looking for $913m to $924m.
Sources: Press release, New York Times
Commentary: Vonage Stumbles on Disappointing 2007 Outlook • Is Vonage Hopeless? • Year-End Vonage Bounce Trade Gone Awry
Stocks/ETFs to watch: Vonage Holdings (NYSE:VG). Competitors: Verizon (NYSE:VZ), AT&T (NYSE:T), deltathree (OTCPK:DDDC), Skype -- owned by eBay (NASDAQ:EBAY)
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