Vonage's 3Q Loss Widens On Charge For Convertible Debt
By Roger Cheng, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Vonage Holdings Corp. (VG) posted a seven-fold increase
in its third-quarter loss as a result of an accounting charge taken for its
convertible debt, while subscribers continue to leave at a high clip.
The Internet phone service company, battered by competition from wireless
carriers, phone companies and cable providers, did see the rate of its customer
defection slow as a result of an aggressive international calling plan launched
in August. The service has attracted certain ethnic groups that tend to make a
lot of overseas calls.
"The market response to Vonage World... was very strong," Chief Executive Marc
Lefar said in a statement.
The company said there are more than 400,000 subscribers to its international
calling plan. As of the end of the third quarter, it had a total base of 2.4
million lines.
Last month, the company released a mobile application for the Apple Inc. (
AAPL) iPhone and for Research in Motion Ltd.'s (RIMM) Blackberry line which
allows for international calls over a handset. Anticipation for the mobile
programs sparked a quick rally in its shares.
Shares recently fell 15.1% to $1.51. The stock has more than quadrupled since
August.
The Holmdel, N.J., company posted a net loss of $54.6 million, or 33 cents a
share, compared with a year-earlier loss of $7.8 million, or 5 cents a share.
The wider loss was attributed to a charge taken to account for the recent rise
in its stock price, which figure into the conversion feature of some of the
company's convertible notes.
Excluding the charge, Vonage posted earnings of 3 cents a share.
Sales slipped 2% to $221.5 million, although the average revenue per line
increased 4% to $29.89.
The company continues to deal with a high rate of turnover, which increased to
3.4% from 3.2% in the second quarter. It lost 50,191 subscribers in the quarter,
compared with a loss of 88,643 in the second quarter.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
(END) Dow Jones Newswires
11-04-091008ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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