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Vonage From The NY Times:
Vonage Moves to Reassure Nervous Investors
By KEN
From The NY Times:
Vonage Moves to Reassure Nervous Investors
By KEN BELSON and MATT RICHTEL
Published: May 31, 2006
Vonage, tarred by a disastrous initial public offering last week, is scrambling to reassure investors. The company, which provides Internet phone service, said yesterday that it would reimburse the bankers who handled the sale if any Vonage customers refused to pay for shares that were allotted to them.
Vonage gave its customers a chance to buy as much as 15 percent of the 31.25 million shares that were offered last week. About 10,000 of the company's 1.6 million customers ultimately received shares, which were sold at $17 each, according to a person briefed on the deal. Customers had until yesterday to open an account with a specified broker and pay for their shares.
Some customers who participated in the "directed share program" were reluctant to pay for their shares after the stock fell. The shares have lost more than 26 percent of their value since their debut last Wednesday. They fell 52 cents, to $12.50 yesterday.
Vonage said in a statement given to the "Squawk Box" program on CNBC: "While all avenues are available to us, we cannot imagine alienating our customers in that way." The company added that if some participants in the program did not pay, "we expect to repurchase the shares from the underwriters if necessary."
The company's assurances are consistent with regulatory filings it made earlier that said it would cover the bankers if necessary.
Brooke Schulz, a company spokeswoman, declined to say how many customers had not paid for their shares in the program.
A few investors posted angry notes on Vonage-related Web sites saying they were unwilling to pay for their shares. Some blamed the company and bankers for overvaluing the shares.
"There is no way I am paying for this and you are out of your minds if you do," read one posting from someone using the name "ipobust."
Vonage, which has racked up hundreds of millions of dollars in losses in part because of its aggressive marketing campaign, does not want to spend more to retain angry customers, analysts said.
"Clearly they've gotten a significant amount of bad press, and for a company spending a lot of marketing to get customers, they will have to spend even more to keep customers from defecting," said Richard Greenfield, an analyst at Pali Research. "It appears that management feels that the directed stock program could backfire and result in higher churn," or customer turnover, he added.
Mr. Greenfield, who has a sell rating on the stock, said the shares were fairly valued at $11.50.
However, Albert Lin, an analyst at American Technology Research, said shares of Vonage could rise to $20 in 6 to 12 months because its cost of finding new customers was relatively low.
He added that the company could become a "tremendous acquisition target."
Read The Full Thread: Tomorrow will not be a good news day for VG
• Judging by the media requests for interviews today and the questions they were
• Care to elaborate?
• I think I should let the writers get their stories in before I comment. You never
• Ok.. so to clarify; you have been interviewed regarding the Vonage situation?
• I have... The Wall Street Journal is the biggest one. I was asked to comment for
• Very interesting.
Please posts links to any articles that might result from
• This is from an article in tomorrows WSJ (which is already online):
One online
• But probably more important for everybody who purchased the stock, the beginning
• and there you have it.... Not a link but the gist of the article.
LuisPR posted "From The NY Times:
Vonage Moves to Reassure Nervous Investors
By KEN" on 05/30/2006 |
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