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Vonage moves offices to Holmdel, N.J.(Asbury Park Press (NJ) (KRT)) Nov. 20--On a typical day, Eatontown resident Paula Pangilinan would have had a 45-minute drive up the Garden State Parkway and Interstate 287 to her job at Vonage Holdings in Edison. "All it has to do is get backed up over the (Alfred E. Driscoll Bridge) and it can turn into an hour with a blink of an eye," said Pangilinan, 40, assistant to the company's CEO. No more worries. As of Friday, her commute shortened to about 15 minutes. Vonage has begun to move about 1,400 employees to its new headquarters on Route 520 in Holmdel, a newly renovated 350,000-square-foot building that it is leasing and which was once home to Prudential Financial Inc.'s property and casualty division. The move is expected to be complete by the middle of December. "I lived in the area my entire life so I know every back road to get from my house to Holmdel without any problem," Pangilinan said. "I am thrilled. We have been counting the days to get into Holmdel." Vonage, co-founded in 2001 by Brielle resident Jeffrey Citron, offers local and long-distance telephone service over the Internet using a technology called Voice over Internet Protocol, or VoIP for short. The technology gives customers who have a high-speed Internet connection a less expensive way to make telephone calls. The move to the new headquarters is just the latest milestone for Vonage. Backed by a marketing campaign on the Internet, television and newspapers, Vonage has pushed down the accelerator on growth this year. The company has more than 1 million customers, up from 390,000 at the start of the year. The company has hired about 400 additional employees, from customer service representatives to engineers, since March. It is expected to hire 600 more employees by the end of next year, Citron said. Vonage is preparing to go public with an initial public offering that could raise as much as $600 million, according to The Wall Street Journal, which quoted unidentified sources. The company is also exploring the possibility of a sale to a larger company for more than $2 billion, the Journal said. The company's venture capital investors, who have put more than $408 million into Vonage, "are likely ready to start collecting a payout," the newspaper said. Citron would not comment on the reports or the company's future plans. "Our goal today is to build a phenomenal franchise and a great company, and I think we do a great job," said Citron, 35. "Today, Vonage's brand recognition is truly rising," he said. "People are increasingly buying our service." Vonage, which is privately held, would not release revenue figures. But Vonage's growth has had its own challenges. At its old 95,000-square-foot headquarters in Edison, employees were working in cramped quarters, with some workers sitting at folding tables. "We are pretty much on top of each other in cubicles that weren't meant to be shared," said Marlboro resident Joann Vought, finance manager. She was looking forward to the move, which will also come with a shorter commute to work. "Obviously, your surroundings play a lot into your general attitude as you are sitting and working in an office," Vought said. Vonage executives chose Holmdel after looking at office space in other parts of New Jersey, including buildings on the Interstate 287 and New Jersey Turnpike corridors. Among the considerations were the hometowns of the company's employees and commute times, said John Rego, Vonage's chief financial officer. "We wanted a nice campus," Rego said. "It certainly is a very nice setting for us to be at and has room to expand as well." The company was awarded a state business employment incentive grant for an estimated $10.4 million over 10 years based on Vonage's intention to create 1,657 jobs over two years, said Glenn Phillips, a spokesman for the New Jersey Economic Development Authority. The grant comes in the form of a rebate on a portion of state income taxes the company withholds on the additional employees it hires. Vonage gutted the building, constructing new open office spaces and putting in amenities such as a gymnasium and a cafeteria that can sit about 600. It also has a Starbucks coffee and juice bar. The 88-acre property also has open space, basketball courts, softball fields, a lined football field and walking trails. What's driving Vonage's growth? More and more people are turning to low-cost VoIP providers such as Vonage for their telephone service. For instance, Vonage offers unlimited telephone calls to anywhere in the United States, Canada and Puerto Rico for $24.99 a month. The service also has other features such as Caller ID, voice mail and the ability to ring your calls on other numbers, such as your cell phone. According to research firm IDC, the number of residential subscribers to VoIP services is expected to grow from 3 million in 2005 to 27 million by the end of 2009. "There is a major shift occuring in the landscape of telecommunications," Citron said. "We believed over some set period of time, the majority of Americans would receive their service over (VoIP)." And the market is getting more crowded as more companies offer VoIP telephone service. For instance, last week cable company Comcast said it has begun to offer its Internet telephone service in Monmouth County. It joins other big players, such as Cablevision Systems, and traditional telephone companies, Verizon Communications and AT&T Corp. Still, Vonage, which was the first company to market a mainstream Internet telephone service, is the largest player with 32 percent of the North American market as of June 30, according to research firm Infonetics Research. Time Warner Cable and Cablevision have a 25 percent and 19 percent share, respectively, the firm said. The large telecommunications firms are putting pressure on Vonage, said William A. Stofega, research manager for VoIP services at IDC. "These Bell companies and cable companies are fierce competitors and they also have the financial backing to do what they need to do," Stofega said. "The space is getting crowded and you better figure out a way to differentiate yourself or you are going to get stepped on pretty hard." In an interview last week, Citron said VoIP is growing faster than anyone anticipated. "As more and more players come into the market, the market actually grows faster," Citron said. "More and more people become educated about the service." The company has been improving its service and making other innovations, such as a cordless telephone system that connects directly to a high-speed Internet connection without the need for any other device. "Innovation is critical to what you are going to see in the future," Citron said. The CEO is no stranger to starting and growing companies. Citron founded online brokerage Datek Online, which later merged with Ameritrade in 2002. But he also has run into some trouble. In 2003, Citron agreed to pay $22.5 million to settle charges brought by the U.S. Securities & Exchange Commission. The SEC charged that he and others at Datek in the mid 90s participated in a scheme to manipulate the Nasdaq's small order execution system to generate "tens of millions of dollars in illegal profits." Citron also agreed to SEC orders that barred him for life from associating with any stock broker or dealer. In a statement at the time, a spokesman said Citron was "glad to put this 5-year-old matter behind him." |