CITRON'S VONAGE LANDS FINANCING By BEN SILVERMAN http://www.nypost.com/business/11629.htm November 24, 2003 -- VONAGE, the voice- over-Internet-protocol (VoIP) provider headed by Datek co-founder Jeffrey Citron, has a bundle of new cash at its disposal. The company plans to announce today that it has secured $35 million in new financing led by venture capital firm New Enterprise Associates. "To get a transaction done with something involving the words 'Internet' and 'telephony' in the same sentence is really an accomplishment," Vonage CFO John Rego said. Rego wouldn't say what type of valuation the company got on the deal, but he says Vonage's management still owns more than 50 percent of the company. Vonage will use the money for marketing and to expand service to Canada and Europe. November 24, 2003 -- VONAGE, the voice- over-Internet-protocol (VoIP) provider headed by Datek co-founder Jeffrey Citron, has a bundle of new cash at its disposal. The company plans to announce today that it has secured $35 million in new financing led by venture capital firm New Enterprise Associates. "To get a transaction done with something involving the words 'Internet' and 'telephony' in the same sentence is really an accomplishment," Vonage CFO John Rego said. Rego wouldn't say what type of valuation the company got on the deal, but he says Vonage's management still owns more than 50 percent of the company. Vonage will use the money for marketing and to expand service to Canada and Europe. "We're in a growth phase right now, and it's a good time to get new capital. We'll be able to offer local numbers in all 50 states next year. We expect to be profitable by the end of Q2 in 2004," Rego said. With over 71,000 customers, Vonage is the market leader among independent VoIP providers. But competition is heating up. The Federal Communications Commission will begin the VoIP regulatory process next week, and what was expected to be a battle between the Bells and VoIP providers is looking more like an all-out offensive against any type of regulation - a clear signal that the Bells will get into the VoIP game in a big way. With fewer jitters about a potential regulatory roadblock, Vonage is now looking to expand distribution of its service. The company already has deals with cable operators Armstrong and Advance, as well as with various retailers, and Rego said there are more deals in the pipeline. "We will be announcing five new deals with cable companies shortly," he said. The $35 million in new funding adds to the $30.3 million the company has raised since early 2001. But will it be enough to one day, as the company hopes, serve millions of customers? "This is not traditional telephony by any stretch," Rego said. "One of the benefits of VoIP is that we don't have the capital expenditures associated with building out a network. We're taking voice and making it an application that rides over the Internet. The money can go very, very far for us." Vonage hopes to exit 2004 with more than 250,000 customers, which isn't far-fetched considering the company started 2003 with only about 7,500. So will Vonage be the third big success for Citron? After helping to start and then sell electronic-trading network Island and online brokerage firm Datek, Citron has kept a low profile at the helm of Vonage. The Securities and Exchange Commission slapped him with a $22.4 million fine in January for allegedly manipulating the Nasdaq's small-order execution system. Citron did not admit nor deny guilt, but he has been barred from association with any broker or dealer. But with Vonage and VoIP taking center stage in 2004, the limelight may well find Citron again.

Telus has launched IP-One, a hosted and managed VoIP service to be offered to businesses in Ontario and Quebec. The service provides a set of applications including unified communications, extension mobility and integration with corporate directory services. It features management of call forwarding and contact lists, web access to email, and ad-hoc multi- party conference calls. The service is driven by Cisco's gear. IP-One is offered on a per seat cost basis. Initial customers for the service include Borland Software; Richter, Usher, and Vineberg; Berlex Canada; and Belron Canada. Telus http://www.telus.com

Synergy Research has released "3Q 2003 Enterprise VoIP Market Shares," a 43-page report that tracks quarterly sales of enterprise IP telephony, LAN telephony (IP-only), converged telephony (TDM/IP), IP phones, and enterprise VoIP gateways. The research includes surveys of 3Com, Alcatel, Avaya, Cisco, Mitel, NEC, Nortel, Shoreline, Siemens, Sphere, Quintum, VegaStream, and Vertical. The firm finds: * The U.S. enterprise VoIP market grew 15% over the quarter * Nearly 1 million IP phones were shipped in Q3 * The U.S. showed the greatest growth over the quarter followed by Asia/Pacific and EMEA * In the U.S., IP phone shipments were up 38% over the quarter. The leading vendors included SpectraLink (up 97%), Cisco (up 77%), and Symbol (up 45%) * The U.S. enterprise IP telephony line shipment market share for Q3 2003 is Cisco at 27.4%; Avaya at 20.2%, Nortel at 13.3%, Mitel at 7.5%, and 3Com at 6.4% Synergy Research http://www.srgresearch.com Infonetics Releases Quarterly Study of VoIP Market Infonetics Research has released "Q3 Next Gen Voice Products Market Share and Forecasts," a study that tracks ATM switch voice gateways, Class 5 packet switches, convergence switches, RAC VoIP gateways, media servers, session border controllers, circuit switched and next generation softswitches, and voice application servers. Forecasts are provided by region for worldwide, North America, EMEA, Asia Pacific and CALA. Companies tracked in the report include Acme Packet, Alcatel, AudioCodes, BayPackets, Broadsoft, Cirpack, Cisco, Convedia, CopperCom, Ericsson, IP Unity, Italtel, Jasomi, Kagoor, LongBoard, Lucent, Marconi, MediaRing, MetaSwitch, Netrake, NexTone, Nortel, Nuera, Pactolus, Santera, Sentito, SnowShore, Sonus, Sylantro, Taqua, Telica, Ubiquity, UTStarcom, Veraz, and VocalData. The firm finds: * Q3 revenues for next gen products totaled $254 million, down 19% from the previous quarter. The revenue is up 15% for the year. * Media gateway revenue totaled $156 million for Q3, down 27% from the previous quarter * Sonus was the only top five media gateway vendor to post improved sales in Q3 * Softswitch revenue totaled $77 million, equal to last quarter's revenues * The media gateway composition for 2003 is found to be 10% Class 5 packet switch, 28% convergence switch, 20% ATM switch voice gateway, and 42% RAC gateway * The revenue breakdown for next gen voice products by region was found to be 37% North America, 27% EMEA, 30% Asia Pacific, and 6% CALA. Infonetics Research http://www.infonetics.com Dell'Oro Releases Study on Worldwide Enterprise VoIP The Dell'Oro Group has released "The Enterprise IP Telephony Report," a study that tracks progress in the marketplace in Q3. The publication tracks analog lines, digital lines, IP lines and units for IP PBXs and traditional key systems, as well as units for IP phones. The report provides quarterly analysis of market size, market share, line/unit shipments, and average selling prices at the worldwide market and vendor levels. The firm finds that more than 1.5 million enterprise VoIP lines were shipped worldwide in Q3, which is an increase of 23% over the quarter. Market share leaders for the quarter include Cisco (shipments up 58%), Nortel (12%), Avaya (28%), Alcatel (1%), and Siemens (11%). Dell'Oro Group http://www.delloro.com