Vonage (NYSE: VG): Is the Situation Getting Better?

Vonage (NYSE: VG) might have found a cure for its worsening financial position. The Internet telephony provider has recently published its second-quarter results, which were slightly better than expected. Is this a start of a something new?

Well, Vonage did reduce its advertising cost, which played a main role in reducing its overall costs. Vonage's loss for the second quarter was $6.9 million, significantly lower than a year ago.

The Holmdel, N.J based company saw an 11% increase in revenues for the second quarter, which grew to a record $228 million from $206 million, in comparison with the second quarter in 2007.

Marc Lefar, Vonage Chief Executive Officer, said, "The financial performance of the Company's operations continued to improve in the second quarter. Vonage delivered top line growth, continued to generate positive adjusted operating profit and cash from operations, and narrowed its net loss."

Vonage said it finished the quarter with more than 2.6 million lines, adding 2,000 net subscriber lines during the quarter.

Little signs of recovering?

As of 3:58pm ET yesterday, Vonage's shares were trading at a price of $1.26.

However, Vonage's biggest headache now is its debt. But, according to Vonage's boss this can also be fixed in the nearest future.

He said, that Vonage has done well toward building up its financial foundation with the signing of the commitment letter that will permit it to refinance the convertible debt. This deal covering a $253 million debt is vital for Vonage. The sooner Vonage solves that problem, the better it will be for the company.

Sources:

http://pr.vonage.com/releasedetail.cfm?ReleaseID=326895

Hotstocked.com articles, 27 August 2008, 11:18