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Vonage: Better, But Not In The Clear

Posted by: Olga Kharif on February 13, 2008

We got some good news from Web-calling provider Vonage today. For the first time ever, in the fourth quarter Vonage reached operational profitability — actually ahead of schedule. The company was only supposed to reach this milestone in the first quarter of 2008.

What’s more, Vonage’s net loss narrowed. And the company just appointed a new chief of customer care, a position that’s been vacated since October. I talked to interim CEO Jeffrey Citron soon after the company’s earnings announcement, and he emphasized that the restructuring effort “is working, the underlying metrics are getting better.”

Is Vonage out of the woods? Not quite. The company still needs to secure more funding ($100 million or so) or reach an agreement with holders of some $253 million in debt that could come due in December. The company has retained financial advisors and is in discussions with lenders and bondholders. Citron is optimistic, but he notes: “We are not exactly sure how long this will take given the state of the capital markets.”

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Reader Comments

David Groves

February 14, 2008 12:28 PM

At last, no errors!

The 13G/A's filed in the last week show one note holder dropping out and two others adding to take up the slack, so it seems there is cooperation and movement towards restructuring the notes going on!

Watch out when this final hurdle is cleared!

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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