I've been dialing around to some other blogs that cover VoIP, and gathering up reactions to the turnover in Vonage's executive suite and what it means to the company.
Opinions are varied, but the consensus seems to be that Mike Snyder's departure represents the will of founder-Chairman Jeff Citron to right the ship. Yet given everything from a looming patent infringement decision to increasingly competitive, larger service providers, doing so won't be an easy task.
Let's see what some colleagues and friends are writing:
If they can get beyond this patent mess – and many people believe the Verizon patents are too broad and really shouldn’t have been granted in the first place, then Vonage has a chance of growing even more quickly.In the blogosphere I am one of the few who thinks this company has a future and a potentially bright one at that. So far I would have predicted the company would have a higher stock price but then again until today there hasn’t been a serious goal of generating profit.We are talking after all about a company with about three million customers. That is $60/month in revenue at a minimum. This is no small sum. The company’s base just grows and grows. If nothing else Vonage is the undisputed VoIP marketing king.The question is whether Citron and company will continue to focus the company on profit now… Cut the cost of customer acquisition and generate earnings. At three million customers they are a formidable force and the company has real value now.Let’s see how they navigate through the sea of patent issues and if they can focus more on external damage control. The media just seems to love to write about this company… The question is whether the New Jersey based VoIP services leader will give them something positive to write about in the near future.
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. Stay tuned as story develops.
Not that this should be a surprise given all that has gone
onwrong at Vonage during his tenure, but one has to wonder if Michael was thrown under the bus to “show investors” that Vonage was serious about cutting costs and making themselves into a viable, long term, profitable business. Seems that Michael is the “fall guy” here, especially since Vonage included a snippet in the press release about their plans to focus on reducing the company’s operational costs, and slashing marketing expense….signs of an investor driven move.
Jeff did most of the talking - no surprise there - and the first order of business was to announce that effective yesterday, Mike Snyder has stepped down as their CEO, and a replacement search is underway immediately. Any takers? Talk about an opportunity for a turnaround artist... or perhaps someone more aligned with where Jeff Citron wants to take the company.
It's not clear to me if this was Mr. Snyder's decision or the board's, but Jeff explained it was in the best interests of the company to do this. Until a replacment is found, Jeff will be the interim CEO.
Of course, by law, Jeff Citron can no longer be the CEO of a public company, so "interim" is the operative word here. Vonage may be his baby, but for now, he probably doesn't have much choice.
Vonage's troubles certainly continue to be in the spotlight. Hopefully, Vonage can get a strong CEO onboard to right that seemingly sinking ship. So this news could turn out to be a blessing for Vonage. Only time will tell.
Oh, and can't forget my colleague Larry Dignan. Terming Vonage "rudderless," Larry writes:
And now Citron, who had been Chief Strategist, has to right the ship as CEO on a "short-term basis." But the risks Vonage noted about Citron before are still in play. Bottom line: Citron may still be a liability. As a Vonage customer questioning the company's prospects, this development isn't comforting.
Meanwhile, Citron is applying the band-aids to Vonage's business. Vonage said it plans to reduce its marketing expense by about $110 million. For 2007, Vonage plans marketing expenditures of roughly $310 million. General and administrative expenses will be cut by $30 million through "consolidation of operations and workforce reduction."
Vonage is projecting revenue of $195 million for the quarter ending March 31. Wall Street was expecting revenue of $197 million, according to Thomson Financial. Vonage is projecting 332,000 gross subscriber line additions, 166,000 net subscribers and an average monthly churn of 2.4 percent. Those projections a bit light, but are in the ballpark of Wall Street estimates.
The big question is how those projections unravel in the upcoming quarters. An even bigger question: What if Vonage needs more financing as it dukes it out with Verizon over patents? Financial firms were wary of Citron before. They certainly aren’t going to be more enthusiastic given Vonage’s problems.
OK, we bloggers have had our say. So what do you think?