GigaOM

Apparently 19% of your readers are Vonage shareholders OM :)

In all seriousness, very simply I believe the company must show (in a hurry) that it can dramatically reverse course in its expense and cash burn, otherwise it’s a foregone conclusion that Vonage will need to access the capital markets again just to stay in place.

Vonage will be a story of shakey start and a huge “finish” with a big return for those that stuck around.

My bet would be between $6 and $8.
If churn starts to be painful for them then probably less than that.

Om,

The poll is entertaining as is, but why not add in the currently omitted $10-17 range and we’ll have actual poll results to look at.

They’re a one-trick pony with no network on which to deliver a more diversified service offering (eg. multimedia). I’m hoping they announce plans to launch a social networking website. That would be an excellent punchline to this joke, don’t you think?

What I would really be interested in is stats on how many Vonage customers knew about their ability to get in on the IPO vs. how many actually did. My bet is that the number of current customers who “took advantage” of this is almost immeasurably small. That is probably the best indicator of how this company is doing.

ken

you have a good point, but it would make the poll too much. but it is a good idea. perhaps we can do this the next time around, when their earnings come out. still this does give everyone an idea as to what the current thinking is. clearly, the poll takers are saying its going to be range bound between $10-and-$5. why not the $10-to-$17, well, the stock is down to almost $13. lets see how it does tomorrow.

I believe that a lot of customers signed up for the IP0. I put in a conditional offer for 100 shares and got none (thank god!), but I know a fellow customer who put in an offer for 4000 shares and got something like 900. That suggests that there was a lot of demand.

Ebay and Yahoo got a big pop yesterday from the proto-alliance talk.

Idea for next poll (s)

Will Ebay and Yahoo merge? Never ;Within 6 months; 6-18 mos.; 18 mos.

Will GOOG market cap outperform combined YHOO EBAY market cap over next 12 mos?

In response to the first comment, the IPO prospectus indicates that their primary strategy is to continue acquiring customers. They will continue to bleed cash until someone larger buys them out or they crash and burn. My guess is the latter, as they’ve now become too expensive to purchase. It would cost an acquirer $2B for $1.6M subscribers, or $1,250 each.

I’m a customer and was eligible for the IPO shares, but passed.

Other — I don’t like those choices. Vonage is a great service. Whether the business succeeds is important. Frankly I don’t think they charge enough. Not that I want my service price to increase. But with cable at $39.95 for most voice all you can eat deals — they should consider upping their fees to stay in business. After all — what good is a $24.95 service if you can’t get it because they go out of business.

Om,

I guess I was lucky because the IPO was only open to US citizens and hence I could not apply.

After my first year with Vonage (this May) I switched to Broadvoice as I can now call a total of 21 countries for free by paying 5 dollars less than Vonage.

It took me almost 3 days trying to get Customer Service to answer the phone to cancel my Vonage account! And they do not work on weekends.

To be fair, I never had any service issues with Vonage. Some of my friend’s have already switched to Sun Rocket from Vonage. However, many do not want to switch yet. Broadvoice and Sipphone ATA works well for me.

Sanjay

Om,

Andy comments “The public offering was largely a means for many of the early round investors to cash out and gain some sense of liquidity.”

i haven’t read the docs, but usually insiders are locked for 3 to 6 months (unless they were side sellers, which means Vonage” recieved less then the advertized cash. Depending on how quickly this rock falls to earth the insiders aren’t going to see a lot liquity unless there are a lot of very ignorant buyers to hold the price up

rob

i think you make a good point. so the numbers we are talking about might actually be lower. let me get back to you on that.

I do get a chuckle out of everyone and their mother trying to INTERPRET the markets and where the stock price is going…in what time frame???? Where is the Vonage MOAT that most good investments need to make traction???? is Vonage a Crox and a one horse Pony or does Vonage reinvent itself into other markets an other territories???? IF I were an RBOC, I would be fearful of VONAGE going after the Big BIZ Customers myself…all I know is CABLE is killing everyone (except Spending MONEY VONAGE) so CABLE wins, everyone else loses ====end of story, END of GAME!
Skibare

If I were a betting man, I’d say it’s going the way of the recent Traffic.com (Ticker:TRFC) IPO. As others have said, a great product does not equal great business model does not equal now is the time to buy the stock. I hope every retail investor who bought this was either using risk capital or will observe a prudent stop loss rule.

I cancelled Vonage last year because their customer service was atrocious. Even after I managed to get someone on the phone who claimed to give a damn, they never followed through. Broadvoice was cheaper and better. (Skype is cool, but quality suffers and they have technical glitches)

They’re going to crash and burn. The cable companies will drop their prices for a few years and crush them. They’ll settle at $6 and eventually run out of money.

Plus that whole anti-geek ad campaign is offensive.

Vonage does still have some areas where they could develop a strategic advantage - but apparently remain clueless.

A codec suitable for reliable fax receipt - no voip provider I am aware of offers this. As a smb consultant, I have had to steer clients away from vonage for fax. Yes - sometimes it works flawlessly, but sometimes - not so much.

Many small biz entities still live or die via the fax machine.

This could be bundled into the current small biz packages Vonage offers which would give them a key advantage, while at the same time encouraging exisiting small biz customers who are using the consumer package to move up to the higher arpu bundle.

All-you-can-eat minutes to select countries as a value added package.

Cellular service moving toward commodity pricing will eat into Vonage’s customer base unless/until they can start offering a voip/cell hybrid package.

Vonage has some positive business attributes as a market disruptor: new business model, low prices, new features.

But does the company serve as a good role model for market disruptors? Is VG a good investment now that the stock has come off?

We graded Vonage using a Disruption Scorecard and it fell short, earning a ‘C’ grade. Why?

VG fails by these measures:
Vonage is not creating a new market;
Vonage business model looks like high-growth now, worry about profits later (we’ve all seen that during the dotcom bubble);
Vonage service doesn’t stand on its own in terms of unique attributes;

Should businesses emulate Vonage’s business model? Is it a good investment?

Both answers look like ‘No.’

Check out the complete Disruption Scorecard at http://www.OnDisruption.com

the fact that they advertise and are with a surplus in earnig profit ratio and they can now offer themselves for those that want to invest in the company and still pay-off 6-9 months from now i think its a good investment