Vonage CEO Snyder Quits, Firm to Cut Jobs4/12/2007 10:40 AM Eastern
Vonage Holdings announced Thursday that CEO Michael Snyder resigned and that it plans to lay off 10% of employees and to reduce marketing expenses by $110 million on the eve of a federal appeals court hearing in its legal fight with Verizon Communications.
The Holmdel, N.J.-based Internet-phone company announced that chairman Jeffrey A. Citron was named interim CEO. Vonage said it will initiate a search for a new CEO immediately.
Vonage also announced plans to slash marketing expenses by $110 million, to about $310 million for 2007, saying it expects to save $30 million through the remainder of the year through “consolidation of operations and work-force reduction.” The company said it would eliminate about 180 jobs, or 10% of its work force of 1,800.
In a Securities and Exchange Commission filing Thursday, Vonage said it anticipates incurring a restructuring charge of approximately $5 million for the second quarter of 2007 for onetime employee-termination benefits.
Vonage announced preliminary financial results for the quarter ended March 31. The company estimated quarterly revenue at $195 million, compared with $119 million for the same period in 2006, and said it added 332,000 subscribers in the first quarter but lost about 166,000.
On Friday, Verizon is expected to file a brief with the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., opposing Vonage’s request for a stay on an injunction that a federal judge issued last week in the telco’s patent-infringement case.
The injunction, which was set to go into effect on April 12, would prevent Vonage from signing up new customers but allow it to service existing ones.
Vonage shares closed at $3 apiece on the NASDAQ Exchange Wednesday. The company went public last May at an initial price of $17 per share.