Worst ipo since 2004

Posts: 14 · Vonage Forum Associate Joined: May 23, 2006 Posts: 14

Well I am out, bought 1300 at 17 sold 15.6. Thanks for the opportunity to get nailed to the wall Vonage. It's my own fault of course but sure does not make me feel warm and fuzzy about Vonage. This is going to be a public relations nightmare. I will keep the service for a few more months to fulfill my one year, but will then leave. I suspect a lot of people are going to be pissed off who bought the stock and leave Vonage quickly. The ipo points to very poor management, and in this competitive industry this stock may have seen it's all time high at 17. Bad pr, lack of street confidence, pissed off customers leaving, where's the upside. I bailed, it's got a shot at bouncing to 15 and that's about it.

Posts: 5 · New Forum Member Joined: May 23, 2006 Posts: 5

I'm wondering if this whole idea of giving the customers the chance to participate in the ipo was done because there wasn't enough interest from the underwriters. We're all big boys and need to take our loses but I'm suspect whether we were told the whole story. This was certainly not something that builds customer loyalty.

Posts: 80 · Vonage Forum Senior Joined: May 24, 2006 Posts: 80

I feel sorry for everyone who lost money on Vonage today.

Most of all though, I feel sorry for those who got into this IPO as Vonage customers. I would assume many of these people bought into the company based on its experience as users, perhaps without giving enough consideration to Vonage as a business.

Even if the company is great for someone as a customer, that is no guarantee that it will be a good investment.

I personally feel that Vonage could not justify the IPO price based on current numbers, and I have gone more in depth on my thoughts about that on my blog http://www.longdistancetalk.com

I would be interested to see if users here share my thoughts, or if you feel I am way off in my analysis...

Posts: 62 · Full Forum Member Joined: Apr 29, 2005 Posts: 62

I think it is acceptable to shoot Vonage ton of nasty emails. God knows you will never get through to them on the phone.

I am re-evaluating getting a copper wire phone line and ditching Vonage.

Posts: 75 · Vonage Forum Senior Joined: Apr 26, 2006 Posts: 75

LDTalk wrote:

...I personally feel that Vonage could not justify the IPO price based on current numbers, and I have gone more in depth on my thoughts about that on my blog http://www.longdistancetalk.com

I would be interested to see if users here share my thoughts, or if you feel I am way off in my analysis...

You analysis is interesting, and based on how the stock performed today that seems to be the thought process of most investors.

I looked at it more from the revenue and subscriber growth perspective and if they can keep the growth rates up in a few years they should be able to maintain at least a positive cash flow, if not profitability, and may also be able to bring down the advertising cost per customer acquisition. We'll see what happens next.

And there is always the possibility of acquisition, partnership, etc.

Posts: 4 · New Forum Member Joined: May 22, 2006 Posts: 4

These discussions about leaving Vonage because their ipo shares kind of crack me up. I don't get it. Why does one use Vonage now at all? If it is good for you now, why wouldn't it be good for you a few months from now? The stock has nothing to do with it. It may foretell things to come many months from now and if the service does change for the worse then you should leave the service if there is something better. Perhaps that is what you are saying.

As far as not being told the whole story...if you've read all of the articles regarding the ipo over the past year you will see that they weren't getting any new investors and capital and that is why they went with the ipo in an effort to raise capital. So the story was there you just had to look.

Having said that, I got in on the ipo and got out. I took it as a small gamble in the hopes it would go up the first few days. It didn't pay off. However, for me the service is the best deal going. I'll stick by until a better service comes along.

Eric

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

ckudrna wrote:

I think it is acceptable to shoot Vonage ton of nasty emails. God knows you will never get through to them on the phone.

I am re-evaluating getting a copper wire phone line and ditching Vonage.

I've seen so many posts like this today and I can't seem to wrap my head around the logic.... Everyone knew the risk involved in a position with VG. The IPO didn't do well so your going to send nasty emails to the company and cancel your service?

How about sending nasty emails to all of those fools who have never been in on an IPO who only wanted to make a quick buck. As soon as the stock ticked down they all sold off. The offer was priced according to demand, we were allocated less shares because of demand. If all of those individuals who sold off today had waited a day or two then we would be seeing something different.

We all knew the risk going into this... The only nasty emails you should be sending is to yourself.. The company didn't make you buy the stock you did it on your own with full disclosure.

Posts: 75 · Vonage Forum Senior Joined: Apr 26, 2006 Posts: 75

eboller wrote:

These discussions about leaving Vonage because their ipo shares kind of crack me up.

I agree, and the few individuals on this board saying they are leaving because:

1) Last night they didn't get an allocation and were mad
2) Got an allocation and are mad because the stock went down

are statistically insignificant and I doubt that even if they do follow through and leave wouldn't be noticed in the Vonage churn rate.

I too would leave Vonage in a heart beat if the service deteriorated, but I've been using it with no problems and no need to contact customer service for 3+ years. And the stock price or allocation would never be a reason for me to leave.

Posts: 14 · Vonage Forum Associate Joined: May 23, 2006 Posts: 14

. And the stock price or allocation would never be a reason for me to leave.[/quote]

I do not think it's a good reason to leave either, I will after my year is up because this is pretty much a commodity product and there are less expensive providers out there. Customer service has slipped for me lately, well in regard to a specific router problem, which I kept telling the good folks in India was the problem, they insisted no and turns out I was right.
But at to those who want to leave because they feel screwed by the ipo, they also have a good point. Yes there's always risk, and yes this is the market talking. but one would hope the company could do a better job of pricing an ipo. Maybe the market is wrong, but regardless if you had not gotten the ipo price you could have bought this a lot cheaper in the market. It would appear the company did a very poor job in setting the price, in fact the worst by any ipo in 2 years. So real issues of trust and management are raised. To me it clearly speaks to poor management and therefore you can count on the fact that sooner or later it will affect all parts of the business. The fact they cost me $2,000 as I have stated does not make me feel real good about them either, and I am sure others feel exactly the same. Yes ipo's involve risk, however they did such an awful job in pricing it's only natural to feel like trust has been violated and that management ****.

Posts: 80 · Vonage Forum Senior Joined: May 24, 2006 Posts: 80

wschalck wrote:

And there is always the possibility of acquisition, partnership, etc.

I think being bought out would be the best solution for Vonage, and I would expect this to happen at some time in the future.

As an independent company, I really do not see how Vonage might ever be able to justify its current market cap, but for the right buyer, things might be differently.

I think a key issue now is to put the money raised through the IPO to good use, as well as to avoid any further increases in churn rate.

While the cost of getting new customers might not make sense financially, I do not think this is where the focus will be for investors in the short term, as I think a higher growth rate would be seen positive, even if the cost of that growth should increase.