Vonage: A Screaming...Buy?

After the company's disastrous initial public offering, some analysts think it may just be priced low enough to deserve a look

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By Timothy J. Mullaney

June 8, 2006 at 4:00 AM UTC

This article is for subscribers only.

It may sound crazy just to think it: Might it be time to buy shares in Vonage (VG)? The company has had one of the worst initial public offering in years, as concerns about mounting losses and increasing competition helped drive its stock down 30%, to $12, since the May 23 IPO (see BusinessWeek.com, 5/22/06, "Vonage On the Line"). If that wasn't enough, the company got into an ugly dispute with its customers over shares in the IPO that Vonage reserved for them (see BusinessWeek.com, 6/1/06, "Vonage to Customers: Pay Up").

Still, most every company is worth something, and analysts are beginning to say that Vonage's stock has fallen far enough that it may be time to buy. Last week, two small research shops that had rated shares in the Holmdel (N. J.) provider of Internet telephone service a "sell" raised their stance to "hold." American Technology Research says it's time to buy, even though Vonage lost $261.9 million last year on sales of $269.2 million. Do they know something the rest of the world doesn't?