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Technology Stocks : Covad Communications - COVD
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To: rjk01 who wrote (10267)5/24/2006 10:53:12 AM
From: rjk01  Read Replies (1) of 10485
 
Vonage has acknowledged it may never be profitable and is viewed with skepticism by many analysts, who cite the growing competition it faces in providing voice-over-Internet protocol (VoIP) services.

The Holmdel, New Jersey-based company said it plans to use the proceeds to fund expansion and marketing and repay debt.

Since its inception in 2001, Vonage has incurred losses in every quarter, a deficit that reached $455 million on March 31, according to a filing with the U.S. Securities and Exchange Commission.

Not only does Vonage face pressure from similar services by eBay Inc.'s (NasdaqNM:EBAY - News) Skype and Google Inc. (NasdaqNM:GOOG - News), it also competes with telephone and cable television giants offering all-in-one packages of voice, Internet and entertainment.

Analysts have said that while Vonage would likely add customers for the next few years due to a rise in high-speed Internet subscriptions, it may have a harder time ahead as cable and telecom companies' bundled services take hold.

The company has grown rapidly in the last two years, more than tripling its subscribers since 2004, but conceded in the filing that it does not expect to sustain that level of growth.

Some skeptics say Vonage likely chose to go public because it was desperate for capital and no company came up with an adequate takeover offer.
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