The Jeff Pulver Blog: Vonage: On the Road to their IPO

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February 09, 2006

Vonage: On the Road to their IPO

When rumors surrounding the Vonage S-1 filing started to circulate in late August, 2005, it was just a matter of time before Vonage filed their S-1. As a minority Vonage shareholder, I welcome the day Vonage goes public.

Unlike many other IP Communication companies within the IP Communications industry that are getting ready to go public, Vonage is a company that has very strong consumer brand recognition across the Internet, in the US and around the world. This is one of the side benefits of spending at the level that they have been on consumer marketing, most recently on TV during the NFL playoffs.

A successful Vonage IPO would be a great positive signal for the pipeline of IP Communication companies which are also getting ready to file their own S-1s to go public. There is a good chance that 2006 and 2007 may end up becoming windfall years for the Investment Bankers who have been active in the IP Communications space and the time that a number of Venture Capital funds will start to see a significant return on the VoIP investments in their portfolios.

Tags: voip, vonage, Jeff Pulver

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Posted by jeff on February 9, 2006 07:05 AM | Permalink

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Comments

Some clever folks have been dubious about the IPO. I think they're worried that the established telcos may respond, cutting Vonage margins, and - more important! - increasing the cost of "acquiring new customers". My take is at
http://www.newswireless.net/index.cfm/article/2627

Posted by: Guy Kewney at February 17, 2006 04:18 PM

I worked for Vonage for a few months. Too much a pressure cooker envirnoment in Customer Service Tech support. There is just too much turn off in new customer service people. They just don't pay enough to keep capable people, and not likelyhood of any proficeny pay raises.

Posted by: David at February 11, 2006 09:08 PM

The Vonage concept is great..but at $217 acquisition cost per customer- I have some serious questions!! Build brand is fine, but for $217 per person they should just give away their service and they will get more users than Skype in a faster time period. This points to poorly executed business plan. If there plan is to spend all the proceeds on marketing, and they are only raising $250 Million, there is a good indication they may be bankrupt by the end of the year-- especially if they have more than $150 million losses per yr..as they are indicating.

Posted by: Zak at February 11, 2006 08:17 AM

I've been using Vonage for one year. At the beginning their customer service was excellent but in the past 6 months they became as slow and unresponsive as the conventional phone companies. The vast majority of the private funds they've raised went into marketing - they built their image instead of improving their technology and service.
ZDNET did an excellent review of the serious problems Vonage faces. http://blogs.zdnet.com/ip-telephony/?p=903 . I would not invest in Vonage without professional financial advice.

Posted by: Mike Micallef at February 11, 2006 06:58 AM

Of course, this being Vonage, you get as many shares as you want for $24.99 ;)

Posted by: Dave Leigh at February 10, 2006 10:59 PM

My options are going to make me rich!

Posted by: Geofrey Orange at February 10, 2006 06:45 PM

Jeff, what do you think the opening price will be? I'm guessing $0.38 per share.

.:Chaka:.

Posted by: chaka at February 10, 2006 03:28 PM

I wouldn't be too excited about an IPO that last year was rumored in the multi billion dollar range, but now only will bring in $250 mill.

Would you really call that a successful IPO?

Posted by: Henrik at February 10, 2006 02:32 PM

I can give you dozens of reasons that Vonage shouldn’t do well as an IPO – however they will – the nature of the beast.

Loose a little on each sale and make it up in volume.

If you are an investor you should be aware that most of the profits from the IPO will be made in the first several weeks and perhaps months – so get in then get out while the stock is on the rise.

You might remember how fickle the public market is when it so called “Punished” Google for only having a 67% increase. (The Google IPO is an animal of a different color).

So Caveat emptor

Posted by: Mark Hewitt at February 10, 2006 01:59 PM

Not sure how good an investment this IPO will be being that:

"Over 1.4 million customers have signed up; its subscriber rolls more than tripled last year alone. Cumulative losses over the company's brief life: $310 million."

http://www.forbes.com/wireless/2006/02/08/ipo-vonage-voip-cz_sw_0208vonage.html

I predict as soon as they IPO they get treated like to the rest of the Telco's; they slash expenses, new subs decline and they flame out like a turn of the millennium start up!

Posted by: David at February 9, 2006 02:17 PM