Most tech stocks were reeling yesterday, as spooked investors feared further deterioration in the economy. But Internet telephony provider Vonage
Vonage's results came with with a slew of adjustments -- financial hits related to stock-option grants and numerous litigation settlements. On the top line, the Internet phone service provider logged $211 million in revenue, 30% more than last year. However, the bottom line is still swimming in red ink -- to the tune of $16 million, if you factor out more than $140 million paid out for lawsuits and royalties.
The big, one-time financial payments Vonage made to Verizon
One positive aspect of the earnings release: Even on a drastically reduced marketing spend of $62 million for the quarter, Vonage was able to grow its base of subscriber lines by 78,000. While not a huge number, it's far better than the customer losses that Sprint Nextel recently experienced. Churn took a huge jump, however, up to 3% -- well above the 2.5% reported last quarter. Another negative -- the average monthly revenue per line dipped slightly to $28.24.
Vonage also announced that a recent patent infringement lawsuit from AT&T
For the time being, however, Vonage and chairman Jeffrey Citron will be focusing on business fundamentals again, particularly the dramatic level of churn. Reducing churn is often costly, though, and it will be some time before investors see how effective the company is at managing its subscriber base going forward.
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Fool contributor Dave Mock believes what happened behind the woodshed stays behind the woodshed. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy can knock out 50 pushups without breaking a sweat.