Hosted VoIP

Covad (News - Alert) was recently sold to private equity, which could be a good thing. The company made a big splash in the business VoIP segment years back, but, more recently Covad seemed to stop focusing on offering converged services and instead shifted the bulk of its messaging to broadband.

 

Part of the reason for this shift may have been service issues — I have heard complaints of poor voice quality from some of our readers over the years.

 

As a point of comparison, during the last year, when Covad stopped focusing on the VoIP market, a competitor who is in the pure-play hosted VoIP space, Cbeyond (News - Alert), saw its shares rise more than $11, or 36%. Cbeyond is now valued at $1.18 billion dollars, in fact, while Covad is valued at $191 million.

 

The new owner of Covad is Platinum Equity, and some advice to the new company would be to stay consistent. Promoting yourself as the ultimate IP Communications solutions provider and then going dark for over a year sends a poor message to potential customers.

 

I started off this entry by saying this purchase could be a good thing; this is why: Over the last year or so, the company has been pretty rudderless. It needs to decide on branding and messaging, and then must follow through. Often, when a company is up for sale, it ceases marketing. This is possibly what happened in this case.

 

A change in ownership can be the impetus needed to turn things around. After all, the Covad brand is definitely well known and, if you can combine this with a consistent message and hopefully a refocus on IP communications, the company has nowhere to go but up.