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Vonage Earnings: A Mixed Bag

Posted by: Olga Kharif on May 08, 2008

Vonage announced its earnings today, and it’s a mix of good and bad news. First, out with the bad: Subscriber growth has slowed further. Churn rose from 3% in the fourth quarter to 3.3%. But CEO Jeffrey Citron told me that was due to a reshuffle in Vonage’s customer care vendors that resulted in longer hold times. That’s been fixed, he says, and churn should come down in the second quarter.

But there are also signs that Vonage could become a turnaround story. Many of its financial metrics — such as average revenue per user — are going in the right direction. The company is close to getting financing to replace existing debt, some of which could come due in late 2008. It’s just begun selling broadband services from partner Covad. Bottom line: Vonage could become a steady business — if it does manage to secure financing, and to significantly bring down its churn.

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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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