Vonage eyes new Wi-Fi products for 2007

By Ritsuko Ando

NEW YORK (Reuters) - Internet telephone company Vonage Holdings Corp. plans to launch phone products based on Wi-Fi wireless technology in 2007, Chairman Jeffrey Citron said on Friday.

Wi-Fi is a popular short-range network technology that is built into most new laptops, and is also being added to some cell phones and portable gaming devices.

"We expect next year, 2007, to release a next generation Wi-Fi product to continue to pursue making those services more available here," Citron, also Vonage's chief strategist, told the Reuters Media Summit in New York.

He declined to elaborate on specific products, but said Vonage's technology could be embedded in handheld devices like cell phones and laptop computers.

"There's so much possibility out there with the construction of mobile Wi-Fi networks going up all over the place, much of that construction is expected to be complete during the 2007, 2008 timeframes," he said.

"For us it will be another generation of handsets for sure, and those handsets will of course ... take advantage of the new trends in this space."

Citron reiterated that Vonage was aiming to make an adjusted operating profit in the first quarter of 2008.

But the company's level of spending on marketing, an area of concern for some investors, would be unchanged or higher next year in absolute terms, he said.

"We do expect it to remain where it is or go up, but as a percentage of revenue we do expect it to come down," he said.

Vonage shares have fallen 60 percent since going public in May at $17 a share amid concerns about increasing competition from cable companies and Internet companies. The shares traded at $6.52 on Friday afternoon, up 2 cents on the New York Stock Exchange.

Some analysts have said Vonage may be bought out by a cable television company or a private equity firm, but Citron declined to comment when asked about possible talks. Asked about possible mergers and acquisitions, he said:

"I think we're open to exploring all transactions that would create value to our shareholders."