Over the past couple years, VOIP phone companies have been big spenders for online advertising. It was the right target market – but not cheap. Competitors essentially bid up the prices.Well, things may moderate. According to a report in the Wall Street Journal [a paid service] and The New York Times, VOIP provider, SunRocket, has shut down its operations.
Funny enough, if you surf the Net, you will still see lots of SunRocket ads. So, I guess the company still needs to take some cleanup actions.
The firm got its start about three years ago and quickly attracted venture capital from firms like Doll Capital Management, BlueRun Ventures and the Mayfield Fund (which, of course, will now have a write off).
Even at that time, things looked dicey for VOIP providers. Vonage Holdings Corp. (NYSE: VG) had a strong presence in the market and there was lots of competition from traditional players, like Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T). Of course, there was competition from cable players.
What's more, it appears there are outages at SunRocket, which is certainly a big hassle for customers.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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