8×8's Q2 results: Growth at Both Ends
October 26th, 2005 Posted in Main Page
Time for one of my favorite VoIP actives: deciphering 8×8 Inc.'s quarterly results.
Let's start with the second quarter's top line: $7.1-million vs.
$2.5-million a year earlier. Sounds good but the bottom line also
expanded: a loss of $5.6-million vs. a loss of $5.1-million. The
company said the red ink is due to growth into new markets such as the
U.K. The question is whether adding 20K subscribers in the quarter (93K
vs. 73K as of the end of Q1) is a good return on investment. Another
burning question is how much gas 8×8 has left in the tank given it now
has $19.7-million of cash compared with $24.9-million at the end of the
first quarter. For 8×8, the pot of gold at the end of the rainbow is Infonetics Research's forecast that
there will be 24 million subscribers and $8.4-billion in VoIP revenue
by 2008, compared with 1.1 million and $255-million respectively in
2004. The problem, however, is the cablecos (Time-Warner, Cablevision)
are coming on strong while Vonage's market share has fallen to its
lowest level in nine months, which is not the best thing for a company
trying to a $600-million IPO. Click here
to check out some the ominous things Infonetics analyst Kevin Mitchell
told Om Malik recently about VoIP start-ups. By the way, investors seem
underwhelmed by 8×8's results as the shares climbed one cent to $1.70.
Let's start with the second quarter's top line: $7.1-million vs.
$2.5-million a year earlier. Sounds good but the bottom line also
expanded: a loss of $5.6-million vs. a loss of $5.1-million. The
company said the red ink is due to growth into new markets such as the
U.K. The question is whether adding 20K subscribers in the quarter (93K
vs. 73K as of the end of Q1) is a good return on investment. Another
burning question is how much gas 8×8 has left in the tank given it now
has $19.7-million of cash compared with $24.9-million at the end of the
first quarter. For 8×8, the pot of gold at the end of the rainbow is Infonetics Research's forecast that
there will be 24 million subscribers and $8.4-billion in VoIP revenue
by 2008, compared with 1.1 million and $255-million respectively in
2004. The problem, however, is the cablecos (Time-Warner, Cablevision)
are coming on strong while Vonage's market share has fallen to its
lowest level in nine months, which is not the best thing for a company
trying to a $600-million IPO. Click here
to check out some the ominous things Infonetics analyst Kevin Mitchell
told Om Malik recently about VoIP start-ups. By the way, investors seem
underwhelmed by 8×8's results as the shares climbed one cent to $1.70.
