Comments on: Vonage Starts Trading, Down http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/ The Business of Technology Wed, 03 Dec 2008 07:37:32 +0000 http://wordpress.org/?v=MU hourly 1 By: biu991 http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52201 biu991 Thu, 25 May 2006 04:43:35 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52201 <p>LD talk…could not agree more. They had to get the customer base to buy into the IPO due to very weak demand.</p> LD talk…could not agree more. They had to get the customer base to buy into the IPO due to very weak demand.

]]> By: Milo http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52199 Milo Thu, 25 May 2006 02:55:03 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52199 <p>LD talk…could not agree more. They had to get the customer base to buy into the IPO due to very weak demand. Talk about stiffing your most loyal customers (pre-Dec-05) with LOSSES…now their VoIP doesn't seem so inexpensive…hmmmm…Do I smell a Harvard Business Case in 3-5 years on what NOT to do regarding customer loyalty???</p> LD talk…could not agree more. They had to get the customer base to buy into the IPO due to very weak demand. Talk about stiffing your most loyal customers (pre-Dec-05) with LOSSES…now their VoIP doesn’t seem so inexpensive…hmmmm…Do I smell a Harvard Business Case in 3-5 years on what NOT to do regarding customer loyalty???

]]> By: Milo http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52198 Milo Thu, 25 May 2006 02:52:32 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52198 <p>Most of those drinking coolaide at Vonage are the same that drank the coolaide from AOL. The CMO and several key VPs in the marketing group are from AOL who exibited lackluster performance at AOL.</p> <p>At the end of the day this company should fall to a valuation of $100/sub or less -- far from the $1000 value they have now.</p> <p>When you look at the subscriber economics the NPV is about zero and B/E is N/A.</p> <p>$25/sub * 20 customer months/sub (5 yr. horizon) acounting for churn dynamics * 40% contribution margins - $213 acuisition costs …take out SG&A, this pig smells like a pig!</p> <p>SELL, SHORTING HARD CORE here.</p> Most of those drinking coolaide at Vonage are the same that drank the coolaide from AOL. The CMO and several key VPs in the marketing group are from AOL who exibited lackluster performance at AOL.

At the end of the day this company should fall to a valuation of $100/sub or less — far from the $1000 value they have now.

When you look at the subscriber economics the NPV is about zero and B/E is N/A.

$25/sub * 20 customer months/sub (5 yr. horizon) acounting for churn dynamics * 40% contribution margins - $213 acuisition costs …take out SG&A, this pig smells like a pig!

SELL, SHORTING HARD CORE here.

]]> By: Kris Tuttle http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52186 Kris Tuttle Thu, 25 May 2006 02:45:26 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52186 <p>I can't figure out why Vonage stuffed their customers with this deal. Of course it was just an option but they went out of their way to make it easy for their customers to buy stock on the deal. </p> <p>It seemed pretty likely the stock would not pop on the IPO but the decline was sharp and immediate. It's one thing for institutional investors to take a little hickey but it another for a customer paying $25/month to get stuck with a loss on VG stock in return for supporting the company.</p> <p>Seems like a dumb thing to do.</p> I can’t figure out why Vonage stuffed their customers with this deal. Of course it was just an option but they went out of their way to make it easy for their customers to buy stock on the deal.

It seemed pretty likely the stock would not pop on the IPO but the decline was sharp and immediate. It’s one thing for institutional investors to take a little hickey but it another for a customer paying $25/month to get stuck with a loss on VG stock in return for supporting the company.

Seems like a dumb thing to do.

]]> By: Long Distance Talk http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52185 Long Distance Talk Wed, 24 May 2006 23:22:47 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52185 <p>For the one who asked above:</p> <p>Outstanding shares in Vonage after IPO is 155.7 million shares. Market cap at $17 per share was about $2.65 billion.</p> <p>Of course, todays drop shaved $330-something millions off from that market cap.</p> <p>I strongly believe Vonage is overpriced, but was still surprised to see the extent of the fall today on its first day of trading…</p> For the one who asked above:

Outstanding shares in Vonage after IPO is 155.7 million shares. Market cap at $17 per share was about $2.65 billion.

Of course, todays drop shaved $330-something millions off from that market cap.

I strongly believe Vonage is overpriced, but was still surprised to see the extent of the fall today on its first day of trading…

]]> By: J Lee http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52183 J Lee Wed, 24 May 2006 18:39:02 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52183 <p>Sort of like a much hyped blockbuster movie that turns out to be a dud (ahem DVC… yes THAT's code)… WOW… now that makes a lot of sense… well at least they walk away (or peddle away) with wads of cash… right? :)</p> Sort of like a much hyped blockbuster movie that turns out to be a dud (ahem DVC… yes THAT’s code)… WOW… now that makes a lot of sense… well at least they walk away (or peddle away) with wads of cash… right? :)

]]> By: bongoboiz http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52181 bongoboiz Wed, 24 May 2006 17:24:39 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52181 <p>I feel bad for vonage employees who were drinking a lot of cool aid and were taking starting salaries below their real worth only to find out that Vonage is a most meshugana place to work. when the emloyees time is to exercise their options they will take it in the tuchas if they did figure this alrady out.</p> I feel bad for vonage employees who were drinking a lot of cool aid and were taking starting salaries below their real worth only to find out that Vonage is a most meshugana place to work. when the emloyees time is to exercise their options they will take it in the tuchas if they did figure this alrady out.

]]> By: Charlie Sierra http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52179 Charlie Sierra Wed, 24 May 2006 16:33:12 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52179 <p>I'd love the hear the conversations with the bankers this morning from the IPO buyers.</p> <p>Buyer: You told me this was solid and would go up so I could dump it.</p> <p>Banker: I never told you that, I only allow to believe that.</p> <p>Buyer: WTF!!!</p> <p>And so it goes. If the buyer wants any action on a real deal in the future they'll just have to write Vonage off as the "cost of doing business" wall street style.</p> I’d love the hear the conversations with the bankers this morning from the IPO buyers.

Buyer: You told me this was solid and would go up so I could dump it.

Banker: I never told you that, I only allow to believe that.

Buyer: WTF!!!

And so it goes. If the buyer wants any action on a real deal in the future they’ll just have to write Vonage off as the “cost of doing business” wall street style.

]]> By: whenwego http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52177 whenwego Wed, 24 May 2006 14:40:49 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52177 <p>Active traders spend actual dollars to buy stock, and count their gains in dollars, not in percentages. Specially option players.</p> Active traders spend actual dollars to buy stock, and count their gains in dollars, not in percentages. Specially option players.

]]> By: Juhani Polkko http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52175 Juhani Polkko Wed, 24 May 2006 00:11:01 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52175 <p>Ok, great. And how many total shares outstanding?</p> <p>I haven't really figured out why in the U.S. especially finance news concentrate on how much companies are raising on IPO or how much the stock is priced. And why the heck the change in stock price is reported in dollars instead of percentages by default.</p> <p>Much more useful information would be telling people what's Vonage's market cap with current number of shares priced at $17.00. </p> <p>I've lived in this country for 2.5 years and nobody's been able to explain this yet. </p> <p>Juhani</p> Ok, great. And how many total shares outstanding?

I haven’t really figured out why in the U.S. especially finance news concentrate on how much companies are raising on IPO or how much the stock is priced. And why the heck the change in stock price is reported in dollars instead of percentages by default.

Much more useful information would be telling people what’s Vonage’s market cap with current number of shares priced at $17.00.

I’ve lived in this country for 2.5 years and nobody’s been able to explain this yet.

Juhani

]]> By: whenwego http://gigaom.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52173 whenwego Tue, 23 May 2006 23:05:18 +0000 http://gigaom.wordpress.com/2006/05/23/vonage-priced-at-17-raises-500-million/#comment-52173 <p>Guess the bankers are making off with the "small change" of about $20 mill (31.2 x 17 -500)! Now if it opens DOWN, what will it do to the venture market?</p> Guess the bankers are making off with the “small change” of about $20 mill (31.2 x 17 -500)! Now if it opens DOWN, what will it do to the venture market?

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