Vonage Cuts Losses, But Subs Growth Stalls

Even though its fundamentals are improving, including a narrowing loss, VoIP provider Vonage is beginning to feel the sting of competition.

For the quarter, the Holmdel, N.J. company reported a loss of $64.6 million on revenue of $181.5 billion. This was markedly better than the year ago quarter, when the company lost $72.3 million on revenues of $95.2 million.

But even with surging revenues, Vonage's subscriber growth is beginning to stall out. The company added its lowest number of customers in two years, 166,000. This was down from 204,591 in the previous quarter, and 207,252 the year previous.

Analysts say that the biggest problem for Vonage in the quarters ahead is increasing competition. New VoIP providers appear everyday, and traditional telecommunications companies are getting into the mix.

Recent moves to offer 'bundled' services are also another issue for the company. Competitors in the cable and phone market are sometimes able to offer a combination of services at a discount price. To stay competitive, Vonage has to keep its prices low, which also give it less room to make money.

Evem with the bad news coming from analysts, the company itself is continuing to stay positive. CEO Mike Synder said the company continues to make progress financially, and hopes to be profitable by the first quarter of next year.