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Summary:

With Skype hogging the limelight, it is easy to forget about Vonage and its pending IPO plans. Vonage, which just hit the million-customer mark, is planning to raise $600 million in an eagerly awaited initial public offering. BusinessWeek, has a very sober assessment of Vonage’s offering, […]

With Skype hogging the limelight, it is easy to forget about Vonage and its pending IPO plans. Vonage, which just hit the million-customer mark, is planning to raise $600 million in an eagerly awaited initial public offering. BusinessWeek, has a very sober assessment of Vonage’s offering, and company’s longterm prospects.

Vonage “can go public in almost any type of equity market,” says Tim Walsh of investment bank Lane Berry, who adds such an IPO “ought to be well received.”…. Time for an IPO may be of the essence. If Vonage waits to go public and its market position erodes further, the share sale may not catch on. There are industry rumblings that Vonage execs were unsuccessful in a bid to sell the company — the preferred exit strategy for its backers. “Vonage is very vulnerable,” says Tom Taulli, an analyst with investment bank Instream Partners.

The article notes that during 2004, Vonage’s share of the VoIP market slid from 61% to less than 30% of subscribers, despite a sharp increase in the overall number of consumer VoIP users. The good news for Vonage is that some of its lesser rivals – Broadvoice and Sunrocket for instance – are either imploding or facing consumer ire because of poor service. Vonage has issues of its own. But none bigger than the ever increasing threat of cable providers, and the Bells, along with other pesky upstarts, and an increasingly unfriendly FCC makes sure that future is not all that bright for Vonage.

Vonage sponsors MTV’s popular reality show The Real World. But as is the case on the MTV show, things can get ugly fast in a crowded house. The same can be said of a crowded market.

  1. Congratulations! Hope you had as much fun writing this blog, as I had reading it!

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  2. Vonage customer service is bad. but what happened to the SEC rules forbidding a crook from running a public company?

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  3. Et tu Vonage?

    The Skype-eBay marriage is dominating the VOIP spotlight today but what of Vonage, which was
    the industry’s poster child before its buzz suddenly evaporated? What
    does the Skype deal mean for Vonage’s IPO, which is supposed to raise
    $600-million. …

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  4. Dear NEA,

    Carlos Bhola was correct after all.

    Without significant MSO or wireless industry partners, Vonage could never achieve anything more compelling than a one hit wonder.

    An iconic consumer brand like Coke, AT&T or McDonalds is built and sustained by hundreds of millions spent each year in marketing and advertising. It is the pinicle of irony for Vonage, having bet the farm on nuicence banner ads, that Skype, spurred on singularly by word-of-mouth and zero customer-care reached such heavenly valuations.

    Having shunned the “powered by” business plan after Bhola’s departure, Vonage ineffectively deployed precious capital marketing to fickle, cost-conscious, endlessly churning, mobile phone toting consumer markets. Standing in stark contrast to the Datek model of delivering low cost, high-volume trades to a greedy, stock consuming public enamered by a rising market, Vonage thought it could repeat success on a faulty premise.

    My predicition is that a Vonage IPO will even have difficulty rising above $10 per share at opening.

    Dave

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  5. Will $600M acquire the next million lines? Or two million?

    And then what?

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  6. After reading “Dave’s” post we all NOW know that Dave is really aka: Carlos Bhola himself. It’s the writing style that gave you away… sounds like sour grapes and jealousy. I’m just surprised you didn’t use the word “maniacal” or the phrase “the cacophony of silence is astounding”
    Get a life!!

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  7. anyone who has met this “carlos” bhola and does not think he is an absolute moron needs to get a life

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