Vonage Creeps Up (VG)

New management over at Vonage Holdings Corp. (NYSE: VG) is going to have its hands full.  The independent VoIP telephony leader did post a narrower loss on expense management.  Its $7 million loss came to -$0.04 EPS (GAAP)as revenues gained 11% to $228 million.  Its adjusted operating income did come in at $12 million versus last year’s -$18 million defecit.

The company said that its average monthly revenue per line rose to$29.04 from $28.38 a year ago. And its churn rate churn fell to 3% from3.3% in the prior quarter.  While it ended the quarter with roughly 2.6million customers, its net subscriber adds were only 2,000 for thequarter.

Most internet and communications growth stories are supposed to havealready grown to wildly profitable entities on GAAP and non-GAAP levels by the time their growth story petersout.  Unless it has some new hat tricks, the company is still losingmoney at the point its growth is stalling. 

There was no formal guidance, but the company said it anticipatesgenerating future growth.  The company has signed a commitment letterto permit the refinancing of its convertible debt, which had beenpreviously signaled. 

Traders may be focusing on this debt refinancing more than any othermetric as shares are indicated up slightly at the open.  The good news is that in a world of triple-play offering from cable, cheap high-speed access, and Skype, the company is still holding its own.

Where thistrades by the end of the day is anyone’s guess.

Jon C. Ogg
August 7, 2008