Free Newsletter
Vonage boss: We are here forever
Vonage chief Jeffrey Citron has been out spruiking the pure-play VoIP company ahead of the company's Q4 result, this week declaring that as far as VoIP is concerned, Vonage "is the sector," and "Vonage is the only company that matters." In an upbeat assessment of the company's prospects he told USA Today: "Vonage and VoIP will be here forever."
Maybe. Comcast and its four million digital voice customers might take some exception to Citron's claim Vonage is the only VoIP company that matters. So too eBay's VoIP juggernaut, Skype, and its 270 million users.
As for Citron's claim Vonage will be "here forever," that will turn on Citron being able to convince his financiers to renegotiate $250 million in bonds due at the end of the year. The convertible notes can be exchanged for stock, but this is unlikely given the stock is trading in a $2 range compared with a high of $13.33 when it was floated back in 2006. In an SEC filing earlier this month, Vonage said it would generate positive operating cash for Q4 which will be the start of a long haul back after writing $240 million of patent infringement checks. In the same filing, Vonage said it expected revenues of more than $800 million for the year, but added that churn would remain stuck at a high three percent. The filing said Vonage expected to generate positive adjusted income for 2008.
In another filing yesterday, Greywolf Capital Partners said it now had 9.3 percent of the stock, up from 5.9 percent a year earlier, so at least someone thinks the shares might be worth more than $2. As previously noted, many in the market believe Sprint could be the white knight that saves stockholders.
Meanwhile, Citron also said Vonage was looking at a "mobile service."
For more:
- Vonage chief stays sunny about the future Article
- Vonage to deliver mobile service Article
Related articles:
Vonage loses patent appeal Report
Can Vonage do it? Report
Comments
Posted by Anonymous | January 31, 2008 - 1:04pm
The CEO's name is Jeffrey, unless he has a younger brother who has recently taken over the business.
And, what does "spruiking" mean?
Aside from those gaffs, the article raises some interesting questions. Citron is usually upbeat, so that's not new, but the financing is another issue. I would think that, if the company is indeed cash-flow positive at the end of 2008 that financiers would agree to a restructuring. Further, the departure of FCC chief Kevin Martin by the end of 2008 will be a boon to all VoIP operators. He's done everything he could to put obstacles in their paths. As the author points out, someone (Greywolf) likes this stock enough to acquire nearly 10% of the company. Much-smaller competitor Packet8 just announced a net income of 2 cents per share, so perhaps there is a turnaround going on for consumer VoIP providers. However, competition in the consumer space is brutal. It's not easy to compete with free services like Skype, even if their quality and ease of use are much less. And Martin has one more year ...
Posted by Mike Dolan | January 31, 2008 - 4:08pm
Spruik: (origin:Australia) - promote: to promote goods, services, or a cause by addressing people in a public place
http://encarta.msn.com/dictionary_561508115/spruik.html
Posted by Peter Rad. | January 31, 2008 - 4:55pm
1) Vonage doesn't have that much cash left, so it needs to convert debt.
2) Citron is under an SEC decree to never run another public company. How is he getting around this?
3) There are rumors of Comcast buying Sprint. And with Sprint's market cap off by so much, how (and why) would they buy a loser like consumer VoIP's king of the arbitrage play, Vonage?
SHARE
WITH:
Comments (4) | Post a comment