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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.