Bigger losses for Vonage since last year
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Vonage issued a very bad quarter financial results. Its losses increased by 17% in the second quarter as customer-acquisition costs stayed high. Very bad announcement, very sad reaction, the company shares drop another 4.5% today, bottoming at $6.77 after its $17 start.
The major reason is the toughen competition indeed. The gap between the VoIP provider and major cable operators has been narrowing since the last year. While Vonage still remains the first provider based on subscriptions, its churn rate (canceling customer number over new ones) is rising from 2.1% to 2.3%. And to defend its position, Vonage said that marketing costs rose 46% to $90 million in the latest quarter.
However, Vonage CEO Mike Snyder keep considering the quarter “as a key inflection point on our path to profitability.” He said Vonage expects to begin generating “adjusted operating profits” by the first quarter of 2008… Would shareholders wait that long?
Aug 1, 2006 | By Nuno
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