Comments on: Vonage Churn Investor Heartburn

By: We HATE Vonage

We HATE Vonage — Sat, 24 Mar 2007 05:39:33 +0000

Dude, Vonage loses patent suit and is a loser. It’s down the $3 per share on March 23,07. dude

By: SZ

SZ — Fri, 23 Jun 2006 23:15:53 +0000

It's interesting, and perhaps telling, that most of the criticizing arguments are based on fundamental analysis of the financials and the supportive 'buy' statements are based on perceived customer service and personal experiences.

Consider the mass market for IPOs - and especially where Vonage cashed in most of its shares. In approaching a generally uninformed public (as opposed to relying solely on traditional insitutional investors), I would say Vonage succesfully leveraged their existing marketing channels to raise exit capital for their investors. Granted they slipped up in the process, but from a strategic point of view, the dual approach of marketing the product/company seems to have worked out.

Perhaps we'll see more of this in the future? I'm thinking of Mark Zuckerberg's holdout on Facebook and the recent Skype acquisition as overvalued branded products showing up on the capital market.

By: Long Distance Talk

Long Distance Talk — Thu, 25 May 2006 00:21:28 +0000

The monthly churn for Vonage is not really that high. The problem though is that it is rising. 1.70% first quarter last year increased by 25% to 2.11% first quarter this year. Chances are the churn will continue to rise… Vonage Churn - Reason for Concern?

By: JP

JP — Wed, 17 May 2006 10:41:42 +0000

I have been a Vonage customer since '03. The only 'service' problems I have had were due to my ISP (Adelphia) and not to Vonage or the hardware (made by Cisco). I live in rural Vermont and the cost of landlines here is outrageaous, however, on the 911 issue, if I loose power or net service, I can plug my phone into the landline to dial 911.

In regards to competition from packaged services by cable operators, you do not have to mobility that you do with Vonage. I tried a smaller VoIP provider before going to Vonage. I switched because the quality of calls with the smaller guy was horrible and touch and go. I have never had that problem with Vonage. I use alot of bandwidth here and it has never interfered with my phone calls.

I am pleased with the customer Direct Share Purchase offer and despite some otherwise (potentially) troubling issues with the IPO, I am in and believe that it will go well. Name recognition, portability, and bottom line cost of service cannot be beat. BUY!

By: J K

J K — Fri, 03 Mar 2006 22:01:20 +0000

The only place you can get a job that you can depend on its still being there would be the government!

It seems to me that the companies that come into existence trying to undersell Vonage will fail even faster. Vonage has the advantage of name recognition. If they can outlast those who try to give it away, and the 'RBOCS' ( An obsolete term in my view) and cable companies calculate that VOIP has little 'bang/buck' for their tastes, Vonage could end up with all the marbles. Phone companies and cable ops. are concentrating on "content" for the foreseeable future because there is no money in bandwith going forward. Would I buy Vonage? Not since I got out of the stock market because Roulette looks more promissing.

By: Anon

Anon — Sun, 26 Feb 2006 19:52:27 +0000

I just received a job offer from Vonage. In light of all these issues with the company, would you advise steering clear?

By: Om Malik on Broadband : » Its A Very VoIPy Tuesday

Om Malik on Broadband : » Its A Very VoIPy Tuesday — Tue, 21 Feb 2006 22:05:47 +0000

[...] The launch of My People (wholesale) shows how crowded and commoditized the VoIP service provider business has become. It doesn’t bode well for folks who are pure play service providers such as Sun Rocket and Vonage. But what kind of fate awaits folks like VoX, which just announced new plans, that are pretty competitively prices. A 1000 minutes across the U.S. and Canada for just $14.95 or VoX Unlimited plan plus 1000 VoX Worldwide Minutes across 34 popular countries for $39.95. They are also offering wholesale packages to resellers. [...]

By: Chris Schagen

Chris Schagen — Tue, 21 Feb 2006 00:56:21 +0000

Also note the customer acquisition cost is typically rising as the installed base increases, especially as they rely heavily on infomercial TV advertising. On a TV networks – e.g. Vonag is big on USA Network – you are pretty much hitting the same viewers over and over again. Assuming there is a potential of say 200k customers amont a networks audience, and paying the same cost per TV spot, you would see the CAC rising by 100% once you already have signed up the first 100k of your 200k potential.

By: Tom T

Tom T — Thu, 16 Feb 2006 20:24:23 +0000

Eliminating the first thirty days of churn would at the very least require the elimination of these sales from the acquired customer numbers and thus increase the recorded cost of acquiring a new customer. I see no notes to the effect that this has been done. Either way I find this practice has no virtues and makes it to easy to hide issues. Say for example the number of customers who acquire the technology but give up in the first month is considerable and growing as the product life cycle moves from fairly technology adept innovators to less adept adopters, this trend would be completely hidden. No, the first thirty day losses have to be included in churn. I have firsthand experience with Telecom churn and the effects of winback, and losing 25% of acquisitions in the first month is all to common. I wish I could make that disappear by simply applying my own definition but real business life isn’t like that. What happens when the incumbent telco’s start more agreesive winback …Von just makes that disappear with the wave of a dictionary?

By: Phil

Phil — Mon, 13 Feb 2006 18:29:20 +0000

Churn at 2% really isn’t that bad relatively speaking in telephony – that’s the same as the average across the entire wireless industry and it’s a lower than the old res LD business and most CLECs. That’s why Vonage’s financials are actually in far WORSE shape than it appears. For a service just coming out of an early adopter mode they already do a good job on churn. And still their financials are horrible – it’s really the ARPU (market driven and falling), ongoing COGS, and marketing costs that are killing them. As long as ARPU keeps declining (a virtual certainty) and marketing costs remain as high as they are I don’t see how they even come close to profitability – ever. The one thing they can reasonably control is churn, and that’s already in decent shape. The rest of the variables are out of their hands unless they go to a more efficient (and far slower growth) sales and marketing model.

By: The Vonage IPO Buzz at Daily Phreak

The Vonage IPO Buzz at Daily Phreak — Mon, 13 Feb 2006 18:12:45 +0000

[...] Vonage Churn Investor Heartburn [...]

By: moo

moo — Mon, 13 Feb 2006 04:16:09 +0000

wireless churn among the top guys is more like 1.5%-2%

By: MC BURNS

MC BURNS — Mon, 13 Feb 2006 04:00:23 +0000

2% churn is a pretty good number. Compare it to...

DBS 1.5 to 1.9% Analog Cable 2 to 4% Broadband 3 to 5% Digital Cable 5 to 8% Wireless 7 to 10%

By: alexking.org: Blog > Around the web

alexking.org: Blog > Around the web — Sun, 12 Feb 2006 17:16:13 +0000

[...] Om Malik on Broadband : Vonage Churn Investor Heartburn [...]

By: Bradley Twohig

Bradley Twohig — Sat, 11 Feb 2006 22:25:52 +0000

Great break down. Excellent analysis of their company. No wonder the VC’s want out.

By: JJ

JJ — Sat, 11 Feb 2006 16:35:36 +0000

I use Vonage and I have to say they are pretty good; they probably just need to curtail their go go internet era spending on marketing; my only issue with cable provided voip is when I need to move, it’s a pain to switch from them; plus the other thing is large telcos/cable firms are not known for innovating and adding new features quickly like pure internet companies like google, etc.