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Vonage Soars (Relatively)

2:50 PM -- Flat-rate pricing is nice and all, but is it that nice? Seriously?

Vonage Holdings Corp. (NYSE: VG) stock has nearly doubled since Friday, when it closed at 46 cents per share. Two days of intense rallying, including a 50 percent climb today, have brought it up to a sparkling 90 cents, as of early afternoon trading.

Vonage did announce a pretty big deal last week: a package called Vonage World that offers unlimited international calling (to 60 countries) for about $25 a month.

And on the plus side, Vonage is profitable, at least for now. Net income for the June quarter was $2 million, or 1 cent per share, by generally accepted accounting priciples (GAAP). Vonage had also claimed a GAAP profit in its first quarter, which ended March 31, but that was padded by a $13 million accounting anomaly. (See Vonage Reports Q1 and Vonage Reports Q2.)

None of this smacks of a reason for a 96 percent jump in valuation, though. What else could it be -- a merger? Vonage would come cheap, certainly, but it's a habitual money-loser that's warring against the overall shift to mobile phones. The growth in subscriber lines has stalled. The count stands at 2.5 million compared with 2.6 million a year ago. Anybody got any other theories?

— Craig Matsumoto, West Coast Editor, Light Reading

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