VG - when to walk away?

Posts: 75 · Vonage Forum Senior Joined: Jun 01, 2006 Posts: 75

With their earnings call just about 2 weeks away, it's a good time to look at the overall health of VG as a company.

At this point, their cash on hand has to be significantly less than $100M. Contrast that with their operating loss for the last 3 years:

2005: -$264M
2006: - $340M
2007: -$261M

At the same time, net customer acquisition has basically ground to a halt and ARPU is decreasing.

If you add all that up, there's no way VG can operate through 2009 without securing new financing. Which begs the question: Who is going to lend them money in this economy?

Do you wait until the bitter end and try to switch your number at the same time as 2.5M other people, or do you recognize the writing on the wall and avoid the hassle?

Posts: 810 · Vonage Forum Evangelist Joined: Jun 08, 2007 Posts: 810

fanninja wrote:

With their earnings call just about 2 weeks away, it's a good time to look at the overall health of VG as a company.

At this point, their cash on hand has to be significantly less than $100M. Contrast that with their operating loss for the last 3 years:

2005: -$264M
2006: - $340M
2007: -$261M

At the same time, net customer acquisition has basically ground to a halt and ARPU is decreasing.

If you add all that up, there's no way VG can operate through 2009 without securing new financing. Which begs the question: Who is going to lend them money in this economy?

Do you wait until the bitter end and try to switch your number at the same time as 2.5M other people, or do you recognize the writing on the wall and avoid the hassle?

Pretty ugly, isn't it.

However, the 1st three quarters of this year show a cumulative loss of $-23.660M. Much better than previous years. FYE loss probably will be in the $-32M area.

Their cash and equivalents have remained constant over the last three quarters and up from FYE 2007's of $71,542M:

3-08: $106,787M
6-08: $126,088M
9-08: $114,452M

2007 FY Revenue was $828.23M, estimated 2008 FY Revenue is $908.53M and estimated FY 2009 Revenue is $929.82M.

Cetrainly NOT out of the woods, but closing the gap!

Posts: 1320 · Vonage Forum **MVM** Joined: Nov 08, 2006 Posts: 1320

If they go broke, I have a cell phone with free incoming calls, I will just use my Grand Central number to make all my calls.

Posts: 293 · Vonage Forum Master Joined: Jan 22, 2006 Posts: 293

What he posted here cuz no one was paying any attention in his other thread under Vonage Stock!!

Actually, I have wondered whether I should move to another provider. But Vonage has surprised me to be alive this long. (Not that I'm complaining.) It would be nice to see profitbility, but if they go under, I guess the worse case is I move to another provider and get new phone numbers. I decided when I signed up that saving money was more important than retaining phone numbers and while a minor hassle, I guess I'm in it either long term or to the end, whichever occurs first.

I really don't think another loss should surprise anyone. In their prospectus at the IPO, it stated something to the fact that they were incurring losses and expecting to continue to incur losses. For me that was enough to stay away from the IPO.

Posts: 810 · Vonage Forum Evangelist Joined: Jun 08, 2007 Posts: 810

I have no interest in the stock, the terms of the preferred stock recapitalization will in the end dilute the common shares.

What is interesting is the economy over the next couple of years.

- How will it affect the "give aways" in the bundled deals?
- What other VOIP offerings will go away, for various reasons (ref: Verizon?)
- How will the government build out of the internet in rural areas affect Vonage, if at all?
- As people cut back on their cell phone pans, will some mobile only folks return to a landline to balance their costs?

Posts: 172 · Posted: Fri Feb 13, 2009 11:50 pm Post subject:

I don't plan on walking away unless they send us word that they are going under. Even with SunRocket, people could print out their statements and port their numbers out to another provider.

I enjoy how stable Vonage is and I'm not hopping off the train unless I'm forced.

Posts: 69 · Posted: Sat Feb 14, 2009 7:26 pm Post subject:

I also do not plan to leave. If Vonage does go under, I'll go back with Qwest and port my #. Maybe I'll just up my Verizon plan. The only thing I am sad about is that Vonage does not participate in the Oregon Telephone Assistance Program.

Posts: 99 · Vonage Forum Senior Joined: Dec 25, 2007 Posts: 99

I have no plans to leave Vonage !

PSJ aka Marc

.

Posts: 8 · Posted: Sun Feb 15, 2009 8:15 pm Post subject:

I too will stay to the very end, if Vonage go under, I go with them, I too am not interested in shares, thats why so many companies go under because they are too interested in making the share holders happy.
The company needs to keep its clients happy, in turn a happy client is a satisfied client and will stick around.
I moved to Vonage for the following reasons....

(1) Cheaper then normal landline.
(2) More features included in the price.
(3) Very good quality calls.
(4) Can take it anywhere I go.
(5) Free calling to Europe.

Where are you going to find all these thrown in features with another provider at this price (landline provider).

Posts: 810 · Vonage Forum Evangelist Joined: Jun 08, 2007 Posts: 810

deanot wrote:

The company needs to keep its clients happy, in turn a happy client is a satisfied client and will stick around.

Yep, and Vonage over the first part of their existence had a problem with CS, but seems to be improving (witness this forum getting less traffic.)

I guess we will find out at the earnings call when they announce the churn numbers.

Certainly the bundling going on out there has really hurt Vonage, and I still wonder how long it will hold up. Kind of reminds me of the Alt A loans, there is always a day of reconing and when the price goes up on these folks, where will they move to? More churn, they go to VG or their POTS line, then another bundle is offered, then back to wherever. I don't have the energy for that, as long as I think I am getting a fair to good deal.