Vonage Holdings Corp shares surged 35% on Wednesday on growing views that the company would survive despite earlier skepticism over its business model. The stock has now climbed more than 300% in the past week, a rally that has surprised analysts who say the company still faces stiff competition and weak revenue. Last week, the stock was trading at less than 50 cents a share, and yesterday it closed above US$2.00/shr. on news of Google Inc’s new voice application may be renewing interest in VoIP, a technology that Vonage pioneered. Vonage was among the first to offer Internet-based calling services to people looking for cheaper alternatives to regular phone lines. Since its inception, the company has struggled with high costs and competition from traditional phone and cable operators that now offer bundled video, Internet and phone services. It is also challenged by SKYPE, a unit of eBay Inc, and other Internet-based services. While it posted its 1st quarterly net profit earlier this month, a weaker economy resulted in fewer subscribers. Vonage, perhaps, is in the sights of a larger company.
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