April 3, 2007 1:43 PM PDT
Vonage's lucky break?
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Moran said he has lowered his expectations for Vonage for 2007. While he had earlier projected the company would end the year with more than 3 million subscribers, he's now predicting it will fall short of the 3 million mark. Previously he had forecast Vonage reaching profitability by the end of the first quarter of 2008. Now the best-case scenario is that Vonage could reach profitability in the second quarter of 2008, he said. But even that is uncertain, he added.
Meanwhile, Vonage is facing stiff competition from cable operators that are bundling voice services similar in price and functions to its own service. Competition is also increasing from Internet companies like Skype, Google and Yahoo that are offering IP telephony services. While Moran doesn't believe that Vonage is in danger of going out of business anytime soon, he said the continuing legal troubles coupled with the increased competition could make it difficult for the company to compete in the future.
"I don't see the company dissolving completely in the near term," Moran said. "But I can't rule it out for the future either."
Even with the VoIP Inc. deal, Moran said he is unconvinced that Vonage will be able to get around the Verizon patents so easily.
"The agreement with VoIP Inc. is still unclear," he said. "But at this point it doesn't change my view that a workaround will be challenging for Vonage."
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