Vonage Losses, Subscriber Cancellations Increase

Vonage Holdings Corp. (VG) appears to have lost its hold on investors. There was a day when an earnings reports from the VoIP service provider spawned dozens of news articles and blog postings.

But that day has come and gone. Evidence? Vonage today reported its fourth-quarter financials to a virtually empty room. A mere three news outlets – excluding yours truly – had even bothered to write about the company’s new numbers, which, in and of themselves, were pretty dismal.

Vonage lost net $40.9 million, compared to a loss of $13.8 million during the same period a year earlier. That’s a $27.1 million spread. Revenue did grow 3 percent to $222.2 million, but that’s likely due to extra charges on services such as visual voice mail because 14,700 net customers closed their accounts.

At least one industry magazine tried to put the positive spin on Vonage’s results. Any optimism for the company’s future, though, should be tempered with reality: The cable operators, and some telcos, are bundling VoIP with their services and making good money doing so. Over-the-top VoIP service has proven unstable and, dare we say it, unnecessary. Why should someone pay extra for Vonage when they can get VoIP through their high-speed Internet provider? Add to that Vonage’s poor performance on the Nasdaq – it’s been warned to boost its stock price and market cap or risk being delisted – and one has to wonder whether Vonage should just call it a day.

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