Vonage Crashing?

Phone+ headline: "Vonage CEO Resigns, Company Restructures".

Citron will serve as interim CEO while Vonage searches for Snyder’s replacement. It was not immediately clear how long Citron will hold the position; he became “chief strategist” when Vonage went public in 2006 because he had, in 2003, been found guilty of day-trading fraud by the Securities and Exchange Commission. He was then barred from serving as a controlling executive and agreed to pay more than $22 million in fines. Citron refused to comment during the conference call on his ability to serve as CEO during Vonage's search for a replacement. As part of its restructuring, Vonage is slashing its marketing spending (“results continue to be disappointing,” Citron said) by $110 million. The company also is cutting jobs and consolidating operations, particularly in North America.

GigaOm speculates: "Some believe that Snyder is the fall guy here, but I think it might be an exit of convenience. Vonage needs the street fighting skills of Citron in the battle for survival. Snyder may have wanted to get out of dodge."

On top of that, Vonage may have to cough up over $250M. Phone+ explains that to get the injunction halted until appeal: "Hilton ordered Vonage to fork over $66 million in bond money to cover lost profits to Verizon. Vonage likely will have to pay another $189 million, which would pay Verizon back for “future lost revenue” while Vonage uses the patents during the appeals process. Hilton was scheduled to make that decision on April 12." (Maybe Snyder left because his paycheck bounced and his stock options are worthless as VG was trading as low as $2.88, now at $3.17. (jk))

BTW, the VoIP Inc. announcement had everyone thinking Vonage had a safe haven, but Vonage explained the VoIP Inc. deal as just for termination in its filing. [source]

Andy @ VOIP Watch quotes an analyst: "the string of troubles Vonage has been experiencing in the past 1+ years, including slower than expected subscriber growth, higher than expected subscriber churn and acquisition costs, and now the patent struggle with Verizon." Just too much at once.

FierceVoIP has Vonage's press release with 1Q07 numbers:

• Total Revenue (in millions): $195
• Gross Subscriber Line Additions: 332,000
• Net Subscriber Line Additions: 166,000
• Average Monthly Customer Churn: 2.4%
• Marketing Cost per Gross Subscriber Line Addition: $275

Yeah. Those numbers won't make Wall Street happy. And how much longer could Vonage keep spending $400M+ per year on advertising? It looked like a pure money grab to me before, but the VZ patent suit will likely wipe it out.

UPDATE: Let's not forget that Sprint is suing Vonage for VOIP patent infringement as well.