Vonage: Bullish or Bearish?

First, the good news from Vonage’s fourth-quarter results: the VoIP service provider now has 2.22 million subscribers after it add another 166,000 customers in the quarter. Meanwhile, it only lost $65-million as revenue nearly doubled from a year earlier.

Now, the bad news: the stock tumbled to a record low, $5.25, amid concerns subscriber growth slowing. Vonage said it expects to have between 2.9-million to 3.1 million customers by the end of this year, compared with analyst expectations about about 3.5 million. The company also expects to lose $150-million to $170-million this year before becoming profitable in early-2008.

So what do you focus on: the good news or bad news? The narrower loss in the quarter or the concerns about subscriber growth? There’s no doubt the competitive landscape is getting more intense as the cablecos and, increasingly, the carriers become more aggressive. Then, you’ve got players such as SunRocket and 8×8. That said, Vonage has 2.2 million customers so it can’t be dismissed. The question is whether Vonage can continue to see strong enough growth to become profitable, establish a solid competitive foothold, and get investors excited again about a stock that has tumbled from its IPO price of $17.

For more, check out AOL Money & Finance; Russell Shaw, who is troubled by the subscriber slowdown, including soft sales during the holidays, and Larry Dignan, who wonders if Vonage has a future, and looks at a possible takeover (current price: $836-million) given the company’s depressed stock price.

Technorati Tags: Vonage