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May 09, 2006
Vonage IPO: Customers to the Rescue
Web-calling service provider Vonage will be making a chunk of its IPO shares available to its own customers. As much as 15% of the shares issued during the IPO, expected any day now, will be sold to users who've signed up for service before Dec. 15, 2005.
That's a super-smart move, especially at a time when many industry insiders increasingly question Vonage's prospects -- and the prospects of the company's IPO. Getting customers involved can help Vonage build up more buzz around its public offering and to make sure its shares trade up, says IPO expert Tom Tauilli.
What's more, such an offering can help Vonage, whose customer churn has gone up a tad recently, amidst increasing price competition, to effectively lock in its user base, says Jerry Kaufman, of consultancy Alexander Resources. With the big portals and cable companies pushing into the Web calling space, and with service prices falling, Vonage needs all the help it can get to raise funds.
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I'm a vonage customer and got an invite to sign up for the IPO. I was reading through the details and they want (require) you to purchase a minimum of 100 shares at a currently estimated price of 16-18$ a share.
That seems awful steep, just quickly looking at the balance sheet and it not being very profitable. I'm seeing people on the net saying that vonage is probably looking to get bought, which would to me have to be a lower price per share than the 16 - 18$ estimate.
I wish I had 1600 bucks to gamble with and be happy if it went up, and no big deal if it went down. At that high an initial buy in, it seems like they think their customers are the only people who will buy the stock.
Never mind the loom of an FCC decision that could happen any day that could either shut vonage down completely, or put them on a closer pricing structure to other phone providers.
IMHO, not a good bet.
Posted by: Gurn at May 11, 2006 09:11 PM
All the reasearch I've reviewed points to an extremely healthy stock at least until there are other VOIP stocks to buy. Timing, brand, growth, size, and pricing have this IPO sitting pretty. Furthermore the IPO market is an attractive place for people to be agian, and VOIP could be the hottest buzz in that world for many years. 49 IPO's since June 05 have averaged 33% out-of-the-gate price growth at an average price of 14.97... is it any wonder the prospectus is between 16 and 18?
Buy big if you can
Posted by: WB at May 15, 2006 01:52 PM
If you are interested in purchasing stock in a leader in the VOIP space, get on this bandwagon if you can. People who are not tech savvy want to use a real phone to make calls, and that's what Vonage allows you to do very easily with the hardware that they sell. I've been a customer for over 3 years and have loved the service...and saved $50/month.
Posted by: Jake Snirley at May 18, 2006 08:30 PM
The client base is worth the big bucks here 1.6M customers since April 1 2006. Revenues at 400M and are headed much higher.Great I.P.O for the future.
Posted by: Victor at May 19, 2006 06:33 AM
Think again. This is a horrible investment. If you put your money in this, you don't deserve to have money because you are a complete fool. My advice - stay clear of this disaster.
Posted by: Tom Banks at May 19, 2006 05:50 PM
Seems like a lot of people out there feel this is a BAD investment. I happen to think the opposite. I've been a customer for about a year and they have saved me plenty of money. And besides, most of my problems are with my ISP not Vonage.
Yes they do have some problems with customer service response, but can anyone name a company today that doesn't?
Yes they have spent excessively on marketing, but that may not be the case once they go public.
And can anyone tell me another company who had revenue increases from 18.8M to $269M in 3 years? And currently report $118M for the first quarter of 2006.
Posted by: Vonage Customer at May 20, 2006 11:43 AM
Been using the Vonage service for about 2 years now. Its a great service. That's why I'm betting a few bucks that it'll also be a nice addition to my portfolio. Listen to pundits and insiders and you'll never take a risk, nor ever make any money. The real plus is you don't really need a PC to use the service. For the 60% or so of households that don't have a PC or rarely use it this is the service for them - not PC-based Skype. Vonage has long term staying power.
Posted by: Mr B at May 20, 2006 05:12 PM
Yes, Vonage has a massive increase in new competitors looming in the future, however, their massive ad campaign (which has prevented profits to this point) has earned them a massive portion of the market. I don't think you are going to see many of these people defecting to other PC based providers. Face it, most people don't want to have to boot up a PC to make a phone call. They want a box they can plug a phone into and then forget it exists. I've been using Vonage for two years now and have now taken it overseas with me. Vonage is here to stay for a significant portion of this rapidly swelling market. I'm buying and in for the long run.
Posted by: Tim H. at May 21, 2006 11:02 AM
I have been a customer with Vonage for over 2 years. When I transfered my account from BellSouth to Vonage I ended up saving $60 a month for unlimited long-distance and local calls. At first I had issues with echoeing , but I called customer service, they tweaked the settings and I haven't had an issue ever since.
I have all the features of Bellsouth, it just cost less. I'm powering all the phones in my house- 5 in total, 2 wired and 3 wireless. Bellsouth keeps calling me to come back and I keep telling them to put me on the do not call list-they keep bothering me.
Posted by: Trentonb at May 21, 2006 03:41 PM
I participated in the customer share allocation and IPO today – and lost my shorts. Thankfully I was not allocated the number of shares I requested (which leads me to think that the offering was oversubscribed). I ended up selling my shares today to cut my losses. I thought there was a reasonable chance that the stock would be decent and that the bankers would have priced the offering correctly. I cant help but think that this is going to be hard for a lot of other Vonage customers to swallow. My bad for taking the risk – but Vonages and the underwriters bad for handling the pricing of the offering so poorly.
Posted by: Erik J at May 24, 2006 06:51 PM
I too was a participant in the IPO shares. It really was something I believed the company could pull off but I feel that they priced the shares a what proved to be a risky if not liable amount. I think the gamble is taken when you buy shares which means my loss is undisputable. Though if a company can not keep the IPO price up, then haven't they lost a fundamental point of being a public company? Its time to ask the underwriters and the CEO where the valuation came from? I mean 20% is a bad IPO loss but 50% tells me somebody different. This tells me they missed the mark and hold some responsibility.
Posted by: Wes R at September 11, 2006 05:29 PM
I also participated in the fiasco that Vonage called their IPO. I have still not paid for my shares, and trying to figure out what I should do about it. Anyone else in the same boat?
Posted by: Mike M at November 10, 2006 06:57 AM