Vonage hits expectations but shares in freefall

VoIP firm Vonage posted better than expected results for its third quarter but despite the news, the company’s share price fell almost eight per cent after it cut its forecast on annual subscriptions.

In a statement, Vonage said it had reduced its net loss to $62m (£32.48m), or 40 cents per share, from $66m for the same period a year ago. Wall Street predicted a loss of 45 cents per share.

After Vonage said its forecast of 2.3 million to 2.45 million new users in 2006 was likely to be 2.2 million and 2.3 million, its share price dropped sharply reflecting ongoing concerns about its longevity. Vonage is struggling to convince the Street that its business proposition can withstand the entry of other VoIP players who are entering the market in droves.

Since its initial public offering in May, Vonage has seen its share price fall by almost 60 per cent.

Vonage said its Q3 revenue more than doubled to $161m, below analyst expectations of around $162.5m.