A Bearish November and December

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

November 20th is a very key date for Vonage investors. It is the day the post-IPO lockup period ends and insiders, who own 80% of the company, are suddenly permitted to sell their shares on the open market.

What happens when the supply of a good goes up 500% but demand doesn't change a bit? The price goes down. Way down.

Another reason Vonage investors should fear the end of the year is tax loss selling. Vonage investors have collectively lost $275 million since the IPO. If they want to deduct those losses off their taxes, they have to sell by December 29th, the last trading day of the year.

Now look, I am a long-term value investor and very bearish VG in the long run. But the combination of the lock-up and tax loss selling look to create the perfect storm in the medium term. Even if you are a long-term bull on Vonage, I think it would be most wise to jump out of the stock now, take your tax loss and enjoy your big deduction this year rather than next, and then jump back in January when these two storms have passed.

Posts: 159

Knowing that Vonage spends most of its money on marketing is another red flag. Think dot com boom. What about making the darn thing reliable?

I do not feel a bit sorry for those investors who sank those 275 millions; these are the market rules. You win some, you lose some.

But those 10,000 Vonage customers... duh. I mean, really.

Don't they have frequent dropped calls, bad connections, equipment failures, phone number transfer problems and tech support issues - like the 1.6 Million of us?

Posts: 20 · Vonage Forum Associate Joined: May 31, 2006 Posts: 20

DigitalVoice wrote:

But those 10,000 Vonage customers... duh. I mean, really.

Don't they have frequent dropped calls, bad connections, equipment failures, phone number transfer problems and tech support issues - like the 1.6 Million of us?

No. Or at least I don't. The service is great. Never a problem,
and it's cheap. What's not to like? Oh, I know, it's not cheap
enough. Since I'm a VOIP convert and I like cheap, I'm
thinking to drop VG and go with the basic SunRocket plan
at $9.95/month.

And this is a part of why VG is heading for bankruptcy.
Their customers are not enamored of VG, they are enamored
of technology and low prices.

I wonder if it will be difficult to retrieve one's phone number
from VG after they are under court supervision? Maybe
time to get moving -- I like that number.

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

Very good point. VG custsomers aren't loyal. 27.6% quit the first year. They are after low prices.

Such customers are worth very little in this marketplace.

xmeyer wrote:

DigitalVoice wrote:

But those 10,000 Vonage customers... duh. I mean, really.

Don't they have frequent dropped calls, bad connections, equipment failures, phone number transfer problems and tech support issues - like the 1.6 Million of us?

No. Or at least I don't. The service is great. Never a problem,
and it's cheap. What's not to like? Oh, I know, it's not cheap
enough. Since I'm a VOIP convert and I like cheap, I'm
thinking to drop VG and go with the basic SunRocket plan
at $9.95/month.

And this is a part of why VG is heading for bankruptcy.
Their customers are not enamored of VG, they are enamored
of technology and low prices.

I wonder if it will be difficult to retrieve one's phone number
from VG after they are under court supervision? Maybe
time to get moving -- I like that number.

Posts: 159

BigTime wrote:

Very good point. VG custsomers aren't loyal. 27.6% quit the first year. They are after low prices.

Such customers are worth very little in this marketplace.

Yes most are after lower prices but aren't we all? I submit to you that they quit because the technology fails to deliver. They quit because VG does not yet have trivial options such as ACR. They quit because 911 is unreliable. They quit because - it - does - not - work.

Actually, I though it was pretty cool to tell my folks I was talking through the internet. But after multitudes of dropped calls... it didn't sound too cool anymore.

The "cool" factor played a role for me. I was also fed up with Quest and wanted an alternative. We all have our reasons.