The speculation of demise has been present almost since the company’s founding. There’s probably an odds book in Vegas on the subject. The Wall Street Journal is adding some fuel to the speculation with a recent article that highlights the latest concern. Vonage’s auditor, BDO Seidman LLP is raising “substantial doubt” about their ability to continue as a going concern. The doubt comes in large part due to a $250 million dollar debt payment looming for Vonage. The debt comes due in December 2008. They obviously don’t have the assets to settle that debt and are looking for ways to refinance it in an incredibly shaky credit environment. As for now, Vonage reports in a recent SEC filing that they ended 2007 with a $217 million working capital deficit.

Vonage has had a significant impact on the competitive landscape. You don’t even need to include their 2.4 million+ subscribers to include them in the VoIP pioneer playbook. Their bigger impact was the fight they brought to the arena, by taking on behemoth incumbent phone and cable companies with a competitive voice product. Some will argue that Vonage brought VoIP to the mainstream. Others will argue that they are “parasites,” riding the networks of their competitors with an inferior product. Whatever the argument, there is no denying their place in competitive telecom history. They’re certainly not dead yet, but it doesn’t look too promising for them. I suspect that Vonage wears this current struggle, as well as their numerous past ones, as a badge of honor. One that they believe they will surely overcome. Stay tuned.

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