1 Less Reason to Believe in Vonage Holdings Stock

Vonage Holdings (NYSE: VG  ) stock is down more than 2% since CEO Marc Lefar announced plans to retire after his replacement is found. He may be leaving at just the right time, Fool contributor Tim Beyers says in the following video.

Lefar deserves credit for keeping Vonage relevant in an increasingly competitive market. Indeed, the company has earned profits in each of the past three fiscal years despite declining revenues. Improving gross margins are the likely catalyst.

Yet in most other areas, Vonage's key indicators are trending poorly. Returns on capital have declined in each of the past three years and now sit at just 7.8%, down from 31% in 2011. Cash flow from operations is down sharply over the same period, leading the company to take on more debt.

There's also increasing competition to consider. Microsoft (NASDAQ: MSFT  ) recently bulked up Skype with a new broadcast-ready version while Google continues to offer free and quite usable voice and video over IP with Google Plus. Add it up, Tim says, and there's no reason to believe new management will produce the sorts of returns for shareholders that Lefar did. (Up more than 160% since joining Vonage as CEO in late July 2008.)

Now it's your turn to weigh in. Do you believe Vonage can overcome competition and deliver value to shareholders? Why or why not? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short Vonage Holdings stock at current prices.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 23, 2014, at 9:59 AM, dgroves0 wrote:

    DISRUPTIVE costs money!

    Allows U.S. Travelers to Receive Calls Free of Roaming Charges When Traveling Internationally

    Users receive calls to their existing cell numbers in the app through patented feature

    HOLMDEL, N.J., April 23, 2014 /PRNewswire/ -- Many Americans traveling abroad have suffered the painful experience of returning home to a bill for hefty international cellular roaming charges. Fifty percent of global international travelers don't even use voice services for fear of those dreaded high roaming costs. Today, Vonage introduces ReachMe Roaming, a patented feature of its Vonage Mobile App that allows U.S. travelers to receive free incoming calls to their existing cell phone numbers when connected to Wi-Fi anywhere in the world.

  • Report this Comment On April 24, 2014, at 8:59 AM, dgroves0 wrote:

    DISRUPTIVE costs money!

    Vonage starts VoIP service in eight Brazilian cities

    Wednesday 23 April 2014 | 16:25 CET | News

    Vonage has commercially launched its VoIP service in Brazil with local numbers in eight cities: Sao Paulo, Rio de Janeiro, Braslia, Curitiba, Porto Alegre, Florianopolis, Belo Horizonte and Vitoria, reports Teletime. The operator is using the fixed telephony licence of local partner Datora, which will be responsible for interconnection and termination of calls in Brazil and for the supply of local numbers. The basic plan costs BRL 55/month, or BRL 45/month with a 12-month loyalty contract,

  • Report this Comment On May 01, 2014, at 9:39 AM, dgroves0 wrote:

    EARNINGS OUT!

    --Vonage Holdings beats by $0.03, beats on revenue --

    -- Vonage Holdings (VG): Q1 EPS of $0.06 beats by $0.03. --

    -- Revenue of $221M (+5.7% Y/Y) beats by $1.4M. --

    -- 40% Year-over-Year Revenue Growth in Vonage Business Solutions --

    -- Revenue of $221 Million up from $211 million sequentially and $209 million YOY --

    -- Adjusted EBITDA(1) of $29 Million --

    -- Net Income of $13 Million or $0.06 per Share Excluding Adjustments --

    -- Broad Expansion of Retail and Online Distribution for Basic Talk --

    --Gross line additions were 191,000, up from 175,000 sequentially and from 148,000 in the prior year.--

    --added 13,000 net lines during the quarter, UP from 9,000 sequentially and up from a loss of 12,000 net lines in the year ago quarter.--

    --During the first quarter, Vonage repurchased 2.4 million shares of its common stock for $10 million--

    --International Roaming for free--

    BRAZIL IS COMING!!

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