Good SA article on VG: "Best And Worst ETFs And Mutual Funds: Telecom Sector "
From yesterday's Seeking Alpha article yesterday May 1, 2013:
"Vonage Holdings (VG) is one of my favorite stocks held by Telecom ETFs and mutual funds and earns my Attractive rating. I love companies like Vonage because they leverage technology to provide services more efficiently. Not only does Vonage lower the costs of communication for consumers, they do so in a profitable and efficient manner by avoiding the capital intensity of the legacy networks. Vonage's return on invested capital is the best in the Telecom sector by a wide margin. At 91%, VG's ROIC is amongst the elite value-creating companies. They have been able to achieve this impressive figure by managing their working capital to maximize cash flows. The company has generated positive free cash flow every year since 2007. In 2012, the company's economic earnings were higher than its GAAP earnings, a rare achievement."
Many long holders are missing the point.Vonage is not telecom company and the only true competitor is Skype.Vonage is a "hybrid",as much software as telecom but what's important is that they make profit by competing with lowest cost service providers.Mobile part has unlimited potential since proliferation of wireless internet and lowering cost of entry for the masses continues.Similar principle applies to fixed internet access but to lesser extend.I think Vonage should refocus it's attention on small business fix line sector especially in combination with extensions.
Evidently, the much maligned Vonage managment chose their priorities correctly again.
Residential VOIP, Mobile VOIP, Video VOIP:
1) "Globally, voice over IP (VoIP) will be the fastest-growing residential Internet service with 560 million users in 2011, increasing to 928 million users in 2016 (10.6 percent CAGR)."
2) "Globally, mobile video will be the fastest-growing consumer mobile service with 271 million users in 2011, increasing to 1.6 billion users in 2016 (42.9 percent CAGR )."
3) "Globally, desktop videoconferencing will be the fastest-growing service, with 36.4 million users in 2011, increasing to 218.9 million users in 2016 (43.2 percent CAGR)."
It looks like RESIDENTIAL VOIP and MOBILE VOIP will gain far more subscribers than BUSINESS VOIP by 2016 and into the future. All the VOIP markets will continue to do very well, but the massive numbers of RESIDENTIAL and MOBILE VOIP will dwarf BUSINESS VOIP expansion and the addition of VIDEO will benefit both it seems.
Nice article: Cisco VNI Service Adoption Forecast, 2011-2016
Try to keep up.... Been there... Done that... History, tail lights:
Vonage Small Business Basic 1500
"SMALL BUSINESS BASIC 1500 INCLUDES:
•1500 minutes of outbound local and long distance business phone service to anywhere in the U.S., Canada and Puerto Rico and 3.9¢ for each additional minute.
•30-Day Money-Back Guarantee.
•Vonage Extensions® - extend this calling plan to your mobile phone at no extra charge.
•With the Extensions® app for iPhone® and Android™, make calls via the Vonage network over Wi-Fi or 3G/4G.
•Dedicated fax line with 500 minutes of outgoing fax service (3.9¢ for each additional minute), plus unlimited incoming faxes.
•Unlimited incoming and Vonage-to-Vonage calls.
•Convenience. With Simul-Ring® you can choose up to five other numbers anywhere in the U.S., Puerto Rico and Canada to ring immediately when someone calls your Vonage number.
•Voicemail, Caller ID, Call Waiting, Anonymous Call Block, 3-Way-Calling and tons of other standard features.
•Online Account Access to manage your features and service.
•Portability. Take your Vonage adapter when you travel and use it wherever there's a high-speed Internet connection."
Good point. Would you say VG belongs more in Fidelity's Select Communications Equipment mutual fund (FSDCX) or their Telecommunications fund? I own FSDCX and some of it's holdings are like F5 Networks, Cisco, etc. The fund has performed at a loss for me the last two years and is at the bottom right now of Fidelity's Select funds. What do you think? Which of Fidelity's Select funds would you say VG fits in? Appreciate your opinion.