First a lawsuit, now Vonage loses CEO
Michael Synder, chief executive officer of Vonage, came, saw and scurried away. Vonage chief executive resigned this morning, in what seems to be an un-ending string of bad news for the Holmdel, NJ-based VOIP service provider. Snyder was the CEO of Vonage for less than a year. He has also resigned from the board of directors.
Vonage Founder and Chairman Jeffrey Citron is going to take over as the interim CEO. Citron, cannot be CEO of a publicly traded CEO as part of a settlement with the Securities & Exchange Commission. The company is looking for a new CEO – not an easy task given the uncertainty around the company.
Vonage has been in crisis mode since it lost its patent case to Verizon, and a US Court asked them to stop marketing their service to new customers. They stay open for business after getting a temporary stay and are appealing the court’s decision that essentially will put them out of business.
The company is also undertaking a restructuring that is going to save $140 million in costs, of which $110 million will come from the marketing budget. No worries people – you will still see those annoying ads, for the company expects to have a marketing budget of $310 million. The company is cutting its work force by 10 percent.
The expense cuts are a move to appease the Wall Street, and also indicate the fight with Verizon and increased competition with cable companies is beginning to impact the company – and not in a good way. Vonage expects revenues of $195 million in the first quarter 2007, with net subscriber additions of 166,000 (21% year-over-year decline) and marketing cost per gross subscriber addition of $275. The company had 332,000 gross subscriber additions. That’s just WEAK!
Some believe that Snyder is the fall guy here, but I think it might be an exit of convenience. Vonage needs the street fighting skills of Citron in the battle for survival. Snyder may have wanted to get out of dodge. Stay tuned as story develops.
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Fall guy? Well, at least the fall wasn’t from very high.
Vonage’s only option is to find a buyer. That really was the case even before the lawsuit. Their business model just doesn’t work. Unable to bundle services, competing with big players while having to use those competitors networks, pushing an inferior product (Vonage VoIP over public internet vs. MSO VoIP over proprietary network) and new regulatory requirements? Now, the only hope is to find a buyer.
Not sure who would step up, I would doubt Verizon will, because I can’t imagine current Vonage customers like Verizon all that well. Plus, I think Verizon wants to kill Vonage just to watch it die.
Fall guy – i read that on another blog. I think he decided to jump ship before it was too late.
As I have written on my blog – http://www.flatplanetphone.com/wordpress
Too little. Too late.
Vonage should take a 3 step plan to make the company immediately profitable
1. cut advertising completely,
2. improve customer service
3. solve / license the patents
stock will double and then Citron can sell out.
What’s disturbing to me about all of this is that the big carriers are all pushing hard now to do voip (among other things), coincidentally as Vonage starts getting beaten into the ground in every direction. There haven’t been many cases of VoIP blocking in the U.S., but I personally think we’re watching a corporate take-down of a competitor. There haven’t been a lot of cases of VoIP blocking in the U.S. but it has happened and that combined with what we’re seeing with Vonage is a little scary.
SIP based VoIP is linked to the PSTN so that patent lawsuit would apply to everybody playing in SIP-based VoIP, no?
You can bet that vendors are hustling to work around it.
Oh, alright, Jeffery, you can quit your begging…for a couple mil up front (no stock options needed…or wanted), I’ll be the CEO of your sinking ship…which I’ll package up and sell off to Verizon or one of the other incumbents…while there’s still something worth selling…
@ steve. hehe.
If anyone has any contact info for Michael Snyder i would greatly appreciate it, want to talk to him about an opportunity.
you can email it to jlevy@anetsite.com
thx
Vonage is a distaster! The service doesn’t work and their customer service consists of overseas representatives with a series of scripts that allow for no thought. They have no respect for customers that have been duped into believing their catchy advertising. This company absolutely deserves to go down! The way they treat customers will/is getting around and that’s going to be their downfall if the lawsuit decision is reversed.
I have presently been paying Verizon $80.00 per Business line, $160.00 for the two I have.
Now I am paying $40.00 total for two lines, saving me $120.00 per month.
I have had no trouble with Vonage service except for the overseas customer service. But, with a savings of $120.00 a month I can put up with a little inconvenience!
Sip based voip is not in trouble…its the analog to digital sectors that will have these issues…if Vonage would switch to a sip based platform they may be able to stick around a while. The Sip platform is newer and Verizon has not and will not have any patents on them…in fact Sip based platforms came around in the early 2004 on public level. The SIP platform gives more features then Vonage can offer…In fact that’s why you have IP based POBX platforms which are hosted by private companies or individuals who own the equipment and only lease the traffic….You will see the rise of SIP based companies and they will not only dominate the telecom sector they will also push into the cable companies as well…My company offers more then Vonage can for less and we have a fraction of the operations cost as they do….