Vonage Founder Replaces Departing CEO, Prepares To Cut Workforce 10% - InformationWeek
IoT
IoT
Infrastructure
News
4/12/2007
11:33 AM
50%
50%

Vonage Founder Replaces Departing CEO, Prepares To Cut Workforce 10%

The company reported revenue of $195 million for the quarter, but said it needs to cut costs and plans to lay off 10% of its 1,800 employees.

Embattled Vonage reported Thursday that it added 166,000 net new subscribers in the quarter ended March 31. But new cracks appeared in the firm's executive suite as chief executive Michael Snyder left, to be replaced by company founder and chairman Jeffrey Citron.

The company reported revenue of $195 million for the quarter and an average customer churn rate of 2.4, which Citron said was too high. The company also announced cost-cutting measures, including a plan to layoff 10% of its 1,800 employees.

"The whole strategy top to bottom will be under review for the next 30 days," Citron said at an investor conference call Thursday. "We're reducing a large amount of spending that is adding a marginal amount of customers."

Vonage has been scrambling to stay afloat since a federal jury ruled against the VoIP provider in a patent lawsuit with telecommunications colossus Verizon Communications. Vonage has been seeking to add new customers and is operating under a temporary order issued by an appellate court.

The departure of Snyder, who also left Vonage's board, was just another in a series of rapid-fire developments -- mostly negative -- that have hit the VoIP company in recent weeks. Citron called Snyder's departure a "mutual decision" and added that the company is seeking a replacement. Snyder had joined Vonage just before the launch of the company's IPO last year; Vonage stock has dropped about 80% since the offering and has hovered around $3 a share in recent days. The stock was up slightly in early trading Thursday morning.

Although the company did not release final financials for the quarter -- it said previously that the numbers would be delayed because of the Verizon litigation -- it did release a few numbers, including reporting that its marketing cost per gross subscriber line addition was $275. At the investor conference, Citron said the number was too high, but he added that he expects new cost-cutting measures will improve the firm's position in the marketplace.

Separately, an informal poll by The Associated Press of VoIP providers found that Vonage's troubles haven't caused a flood of Vonage customers to seek alternate VoIP calling plans.

"I would suggest that average consumers are unaware of the [Vonage] ruling, and that many may not understand the role of VoIP architectures in the delivery of their phone services," a spokesman for Cox Communications, which offers a VoIP service, told the AP.

Indeed, a recent Forrester Research study found that VoIP is still way too complex for most mass-market consumers to understand.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
Digital Transformation Myths & Truths
Transformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll