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Technology Stocks : Vonage Holdings
VG 8.570-0.1%Oct 31 9:30 AM EST
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To: Guy Gadois who wrote (85)8/26/2009 9:18:34 PM
From: Dave  Read Replies (1) of 141
 
You are reading too much between the lines.

Vonage still could be a dead company, but now has a pulse. By offering free International calling, they are opening themselves up to a new market segment, while not attacking either Telco or Cable directly. The Triple Play basically destroyed Vonage since both Telco and Cable were essentially giving Voice away for free (albeit for a short time -- 1 year or so).

With their new offering providing free Voice calls, Vonage is no longer trying to be a landline replacement, but rather differentiate themselves (for the time being) and attack the prepaid calling card market. Secondly, they are enabling a user to use their phone rather than computer to make these calls. I'd guess that its a royal pain to set up a computer to computer call -- now all one has to do is call your relative.

Lastly, international calls are expensive for the provider -- I'd guess that margins will be compressed, but hopefully with greater volume they (Vonage) can figure out a way to make some money. That is a wait and see.

To reinforce that this market rally in VG has something behind it, when VG reports their Q3 numbers, look for:
1. Huge spike in Subscriber Line Additions
2. Huge decline in Subscribe Line Acquisition Costs
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