Vonage's 3Q loss narrows

HOLMDEL, N.J. - Internet telephone company Vonage Holdings Corp. Thursday reported a narrower loss for its third quarter, but added a net of just 9,500 subscribers.

The persistently unprofitable company posted a loss of $7.8 million, or 5 cents per share. A year ago, it posted a loss of $158 million, or $1.01 per share, after $133 million in charges for lawsuit settlements.

The loss in the most recent quarter matched the average expected by analysts polled by Thomson Reuters.

Sales were $225 million, up 7.2 percent from a year ago.

Vonage was a pioneer in Internet telephone service, supplying customers with adapters that let them plug their home phones into their broadband connections.

It added hundreds of thousands of customers per quarter as recently as two years ago, but growth tapered off as Vonage battled patent lawsuits and faced growing competition from similar services provided by cable companies.

In the second quarter, Vonage added 2,000 lines. The total is now at 2.6 million.

Churn, or the number of customers canceling service in a month, was at 3 percent, unchanged from the second quarter and from a year ago. Executives have repeatedly pointed to the need to reduce churn through improvements in customer service.

Monday, the company cleared a hurdle by refinancing $253 million in convertible debt.

"Although we anticipate modest growth for the balance of the year, the changes we are putting in place should position us for accelerated growth in 2009," said Chief Executive Marc Lefar.

Shares of Vonage rose 7 cents, or 8.2 percent, to 92 cents in Thursday trading.

A week ago the company received a warning from the New York Stock Exchange that its shares were in danger of being delisted because the price is too low. Vonage has six months to bring the stock back above $1, which could be accomplished by a reverse split.

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