Why Vonage Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Vonage (NYSE: VG  ) have popped today by as much as 13% after the Internet phone specialist reported earnings.

So what: Revenue in the fourth quarter came in at $214 million, with earnings per share of $0.06. Average revenue per user also put up a healthy sequential increase from $29.31 to $30.15 due to price increases and other factors. Customer churn also fell by 30 basis points relative to the beginning of the year.

Now what: Due to the low-interest-rate environment, Vonage has decided to enter a new credit agreement for up to $145 million to increase its financial flexibility. In addition, the board has authorized a $100 million share repurchase program through the end of next year, replacing the previous $50 million program. For 2013, Vonage is planning to spend $5 million to $10 million per quarter investing in growth initiatives, with total capital expenditures of $30 million to $35 million.

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  • Report this Comment On February 13, 2013, at 4:49 PM, masterwallstreet wrote:

    In my opinion only, this is a sleeping giant that has not really woken up yet. When it does, it will make a giant move. This stock is way undervalued, it should be trading anywhere from 6 to 8$ or more. Right now it is a great buying opportunity. When the giant wakes up, it will be too late. You will lose your opportunity to buy at his ridiculously low price.

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