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BellSouth Deal Boosts 8x8

December 12, 2005 | Mark Sullivan | Comments (2)
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8x8 Inc. (Nasdaq: EGHT) shares jumped 43 percent Friday on news that BellSouth Corp. (NYSE: BLS) is reselling a version of the company's Packet8 VOIP service. (See BellSouth Launches Residential VOIP.)

Light Reading broke the news hours before the company's official announcement. (See Does VOIP Business Add Up?.) And after confirming our story, 8x8's stock jumped again after hours.

8x8 shares were up 0.5227 (42.84%) to $1.74 in trading Friday, but then they rocketed up $1.28 (73.29%) to $3.02 in after hours trading.

"8x8 has always been a volatile stock," 8x8 CEO Bryan Martin told Light Reading during a phone call after market close Friday. "But I think people know that the big phone companies do a significant amount of testing and validating of any technology they are going to work with, so people tend to speculate that they are buying stock in a recognized brand."

8x8’s stock price has ranged from $1.03 to $4.47 during the past year.

Under its agreement, 8x8's Packet8 service will be rebranded and sold as "BellSouth Digital Phone Service" on the BellSouth Website and through various other channels.

And that BellSouth name adds a premium. 8x8's Packet8 Freedom Unlimited plan, with unlimited local and long distance calling to the U.S. and Canada, costs $19.95 a month. But BellSouth customers will initially pay $29.95 a month for BellSouth's rebranded version. (See 8X8 Intros VOIP Plan .)

"What you're getting for that 10 bucks extra is the BellSouth brand," Martin says. "I think they think they can get $30 per month." Martin adds that the BellSouth service includes some minor features that have not yet been added to the version of the product available directly from 8x8.

Martin says his company now has more than 100,000 VOIP lines in service, most of which are residential lines, while 15 percent are for enterprise customers. Ten percent of the lines, he says, are being used for the company's videophone service.

Martin says 8x8 has received projections from BellSouth on how many of the carrier's subscribers are expected to buy Packet8 service, but says he is "not at liberty" to disclose the numbers. (See Insider Sees VOIP Battle Royal.)

8x8 has been in business under several different names since 1987, selling everything from programmable semiconductors to consumer videophones. The company is headquartered in Santa Clara, California.

— Mark Sullivan, Reporter, Light Reading
Newest Comments First       Display in Chronological Order
voyce_overipee
User Ranking
Monday December 12, 2005 2:55:45 PM
no ratings
Is this value sustainable given the immediate new revenue recognition from the Bell South arrangement? Shouldn't be, because the BellSouth business will disappear as quickly as it came, once the carrier builds its own service.

If you belive BSouth can build their own anytime soon. Plan B if they can't make it work themselves could be to buy 8x8, and then their stock is worth it. A gamble, but isn't that the definition of buying stock?
Mark Sullivan
User Ranking
Monday December 12, 2005 11:56:17 AM
no ratings
Suprising leap up in value over the weekend for the 8X8 stock. Is this value sustainable given the immediate new revenue recognition from the Bell South arrangement? Shouldn't be, because the BellSouth business will disappear as quickly as it came, once the carrier builds its own service.
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