Wednesday, November 21, 2007

Vonnage STILL Sucks .... The Future Is NOT Bright

Vonage recently released their third quarter earnings, which indicate that the company saw a third-quarter net loss of $162 million ..... thanks in large part to the $133 million spent last quarter on legal expenses. They added 78,000 subscribers last quarter ..... at least one of whom didn't even have a computer!! Wow...that's a particularly impressive feat. [...snicker...]

The company's churn rate, or rate of customer defections, rose to 3% from 2.5%. "The result of the existing care problems and negative press associated with the litigation caused churn to rise to 3 percent," Jeff Citron tells Reuters. No S*&T Shirlock. Your customer services sucks!! We all know that but you're just now finding that out??

"The first thing the company needs to do is fix the customer service issue," Citron insists. Of course, you all knew that. You've known it for a long time. Ahhh .... haven't you?? ;)

Vonage also says they've settled their patent dispute with AT&T to the tune of $39 million over five years. Meanwhile, Time Warner Cable jumped past Vonage this week to become the second largest VoIP provider in the United States with 2.6 million VoIP customers. Comcast is dominating the sector with 3.8 million VoIP customers.

You have to admit that Vonage has fought hard to stay alive. The company’s legal battles finally seem to be coming to an end which has helped its stock gain a little bit of ground. Considering how low they were in the first place that's not really saying much though. Now they’re turning an eye towards trying to improve their customer service in the hopes that they can actually hold on to customers once they get them. But there is a dark cloud hanging over the future of Vonage. In December of next year, the company’s debt of over $250 million is going to mature. Vonage hopes to restructure that debt and make it possible to remain in business. However, they say that plans to do so are too “premature” at this time to discuss.

And they want to talk about integrity??

You have got the be kidding! This company's IPO was $17 a share and has never seen $3 let alone $10 since. It is run by Jeffrey Citron who paid $22.5 million to get out of trouble with the SEC.

This company also has no problems getting loads of BBB complaints and even sending Vonage to people with dialup or no Internet. It even takes longer to cancel Vonage that it does AOL. It has never made a profit.

Vonage has to be the crookedest IPO to come along since the Internet bust revealed a bunch of the most lame-brained ones.

By the way, Vonage only has $150 million in cash and that's good for one more round of infomercials and one more quarter of dodging cancellations. IMHO 2008 will probably see its bankruptcy filing.

Anyway, Vonage had a good idea (emphasis on HAD)..... and when they're gone others will be sure to fill in the gap. Besides the obvious patent research lesson, the big one to learn is of customer service. If you've remembered anything about user ramblings on any Vonage news post .... it's that of poor customer service. Most people leapfrog other providers because of just that. And many of you know first hand with your providers what it feels like to go from one sucky system to another.

My sugestion is to stay well away from Vonage and look to other alternatives. Sooner rather than later. Maybe a cable provider such as Comcast, Time Warner, or Cox. I would also take Packet8 seriously too. Packet8 is very stable, has a great reputation in the small business world, and has a pretty good residential service too. You can find out more about Packet8 here:

Residential and Business VoIP Provider


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