Will Vonage Become a Penny Stock?

Posts: 111 · Vonage Forum Senior Joined: Jun 15, 2006 Posts: 111

This guy isn't a "paid basher" he isn't a "naked short" he is a guy who is knowledgable enough about the industry to get paid to blog about it.

Don't feel sorry for those who bought it at $17; this offering smelled from the beginning. In fact, the company prospectus itself admitted that Vonage may never make a profit.

The stock may be a shade under $8.50, but there's plenty of room for it to head down -- and it will. It has nothing to offer that big telcos and small upstarts can't offer -- and they'll ultimately offer VoIP calls for free (some are already).

If calls can be made for free, why should anyone subscribe to Vonage?

The only thing of value the company has at this point is a subscriber list. But considering that the list is composed primarily of people who's main interest is in getting as cheap a phone subscription rate as possible, what's the value in the list? There's nothing to upsell them.

So don't be surprised when Vonage continues to tank. That's the only way it's heading.

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

It's good to see that there are nervous shorts out there like this guy.

When the stock starts to trade up, it will be the shorts that bid the stock up even faster as they cover their positions.

VOIP is the future and Vonage will continue to grow. The IPO pricing may have been very aggressive, but the number of subscribers that they have and are gaining is very enviable.

Posts: 476 · Posted: Mon Jun 26, 2006 10:09 am Post subject:

Just from the guy's statement about free VOIP phone calls it's obvious that he has no clue about the business of which he is writing.

Posts: 72 · Full Forum Member Joined: Mar 21, 2006 Posts: 72

blakadher wrote:

Just from the guy's statement about free VOIP phone calls it's obvious that he has no clue about the business of which he is writing.

I'm not sure that he has a clue about business at all. Any business, regardless of which sector it is operating in, has to have a source of revenue. How does he think a company can offer their only product/service for free?

Posts: 1123 · Vonage Forum **MVM** Joined: May 26, 2005 Posts: 1123

I believe what he's inferrinf is that Big Cable will offer it as a bundled service, with Digital Cable and HSI. Eventually, I think he's saying, is that it will just become a part of HSI and not be charged as a separate service. I guess.

Posts: 493 · Vonage Forum Evangelist Joined: Apr 29, 2005 Posts: 493

navydavy2001 wrote:

I believe what he's inferrinf is that Big Cable will offer it as a bundled service, with Digital Cable and HSI. Eventually, I think he's saying, is that it will just become a part of HSI and not be charged as a separate service. I guess.

The odd part is that he says that some are doing that already. Are any?

BigTime wrote:

...and they'll ultimately offer VoIP calls for free (some are already)

Posts: 72 · Full Forum Member Joined: Mar 21, 2006 Posts: 72

navydavy2001 wrote:

I believe what he's inferrinf is that Big Cable will offer it as a bundled service, with Digital Cable and HSI. Eventually, I think he's saying, is that it will just become a part of HSI and not be charged as a separate service. I guess.

You're probably right, but I don't see that happening either. To provide a universal VOIP service you need to partner with a CLEC or ILEC to route incoming POTS calls, and use the appropriate telco to complete outgoing VOIP-to-POTS calls. The ISPs that are also telcos could handle the first of these in-house and, in some instances, the second, but in general this sort of service would require the ISP paying out real money to some other company, especially for the cable ISPs. I think it is very unlikely they would cover this cost just to provide a value-add.

Posts: 111 · Vonage Forum Senior Joined: Jun 15, 2006 Posts: 111

There is no reason for a short to be nervious. The stock dropped from 17 to 8.45, and now is at 9.00. That is hardly worrisome. If VG were a profitable company and not facing deep-pocketed competitors, then maybe.

Read the whole post
http://www.networkingpipeline.com/blog/archives/2006/06/skype_and_vonag.html

Here is the bio of the blogger. You think you know more about internet technologies than he does? Just like you know more about investing than Jim Cramer? I respectfully disgree but have no desire to argue the point.

:

Preston Gralla is the editor of WindowsDevCenter.com and OnDotNet. He is the author of Internet Annoyances, PC Pest Control, Windows XP Power Hound, and Windows XP Hacks, Second Edition, and co-author of Windows XP Cookbook. He has also written more than 30 other books. He has written for major national newspapers and magazines, including PC Magazine, Computerworld, the Los Angeles Times, the Dallas Morning News (where he was the technology columnist), USA Today, and several others. A well-known technology expert, Preston has also appeared on many TV and radio programs and networks, including CNN, MSNBC, and NPR. In addition, he's won a number of awards for his writing, including Best Feature in a Computer Magazine from the Computer Press Association. He lives in Cambridge, Massachusetts.

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

Vonage's EBIT before marketing expenses is positive and growing at a rapid amount. (Check out Citron's presentation on 6/26).

That means that the company could choose to be cashflow positive today. It obviously has chosen to grow and incurs huge marketing expenses.

Don't hold your breath waiting for the company to be a penny stock.

Posts: 13 · Vonage Forum Associate Joined: Jun 21, 2006 Posts: 13

<----- it's coming! Twisted Evil