Thursday, May 26, 2005

8x8's Losses Grow

Mark Evans

It's difficult to get excited about any part of 8X8 Inc.'s fourth-quarter results. While revenue nearly doubled to $3.9-million from a year earlier, the Internet telephony company's losses soared to $7-million from $1.5-million. The company attempts to cover this bad news by pointing out the number of subscribers rose to 57K from 40K, while it has $31.8-million of cash. Let's be honest: 17K subscribers is what Vonage is attracting every two weeks, while 8x8's cash position was buoyed by a stock offering. It is readily apparent that 8x8 is a company struggling to catch the VOIP wave. The challenge, however, is investors have yet to caught the VOIP bug. If you look at the recent performance of publicly-traded VOIP companies, very few have done well. 8x8 shares have tumbled by about 50% so far this year - cracking the $2 level today. While 8x8 may have the best VOIP service - according to TomsNetworking - it's not attracting enough customers to make it anything more than a marginal player in a market that is seeing growing competition from cablecos.


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