deltathree Hopes Shakeup Spells Success

At the same time, deltathree’s stocks, as well as those of its counterparts, have hit the skids. Investors are lackluster about standalone VoIP, especially as the economy slows. For example, Vonage stocks remain below $2 even though the embattled company finally went cash-flow positive in the fourth quarter of 2007. Packet8’s provider, 8x8 Inc., has seen its stocks fall to 99 cents with a year-high of $1.57. Primus Telecommunications Inc., operator of Lingo, owns stocks worth 34 cents apiece. SunRocket Inc. no longer exists.

Meanwhile, cable VoIP providers are recording ever-higher profits, according to New Paradigm Resources Group (NPRG). Cable industry VoIP sales have skyrocketed from about $1 million in 2005 to more than $5 million, NPRG said in March. At the same time, incumbent AT&T Inc. and Verizon Communications Inc. are gaining ground, NPRG said. Such growth pits smaller niche players against carriers with big marketing and investment budgets.

The fact is, pure-play VoIP is not the money-making messiah the industry once believed it would be. The unanswered question is how will providers differentiate themselves and become profitable?