Vonage Bankrupt by 2009 -- Citigroup Analyst

Posts: 144

"Citigroup Analyst Michael Rollins said earlier this week that Vonage may go bankrupt by 2009 and urged investors to sell shares [...] Rollins said the company’s ongoing patent litigation is one obstacle to Vonage’s financial success. He also reduced his stock price target for the VoIP service provider from $7 to $2.50."

Full story http://www.networkworld.com/news/2007/032807-vonage-could-go-bankrupt.html

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

That's the same guy that was involved in the IPO valuation.....

Posts: 233 · Posted: Thu Mar 29, 2007 5:35 am Post subject:

While I think he is wrong, his prediction is exactly what the old big boys want. Sprint Nextel is next up to bat. I have an idea. Why doesn't Verizon and Sprint sue each other so they can settle up who gets to sue all the VoIPs that are coming to their playground. Sprint hasn't really invested well in their own VoIP program and they stated their own goal of block and tackle. Look here: http://blogs.zdnet.com/ip-telephony/?p=687. Yes I found that article over a year ago. I guess they will try anything.

Posts: 144 · Posted: Thu Mar 29, 2007 8:36 pm Post subject: Not 2009 - 2008?!

Vonage could go bankrupt in 2008...

Details here:
http://voipservices.tmcnet.com/feature/articles/5983-vonage-out-business-two-years.htm

Posts: 2126 · Posted: Thu Mar 29, 2007 8:46 pm Post subject:

Operative words: "Could" and "if"

In a research brief sent to investors Tuesday, Citibank analyst Michael Rollins said Vonage – the largest and most successful VoIP provider in the US - could undergo “a financial restructuring or bankruptcy in the 2008 or 2009 timeframe,” if it loses its court battle with Verizon.

Posts: 144 · Posted: Thu Mar 29, 2007 9:00 pm Post subject:

dconnor wrote:

Operative words: "Could" and "if"

In a research brief sent to investors Tuesday, Citibank analyst Michael Rollins said Vonage – the largest and most successful VoIP provider in the US - could undergo “a financial restructuring or bankruptcy in the 2008 or 2009 timeframe,” if it loses its court battle with Verizon.

Yes, conditional.

But on the flip side, if Vonage wins this could mean big money.

Posts: 144 · Posted: Fri Mar 30, 2007 7:58 pm Post subject:

dconnor wrote:

Operative words: "Could" and "if"

In a research brief sent to investors Tuesday, Citibank analyst Michael Rollins said Vonage – the largest and most successful VoIP provider in the US - could undergo “a financial restructuring or bankruptcy in the 2008 or 2009 timeframe,” if it loses its court battle with Verizon.

Oh BTW ...

"Vonage, which hasn't posted a profit since it was founded by Jeffrey Citron in 2000, will face a similar fight in September when it goes to trial against Sprint Nextel Corp."

http://www.bloomberg.com/apps/news?pid=20601109&sid=a24XDC0uuIfk&refer=home

So I guess the largest and most successful VoIP provider in the US - could undergo “a financial restructuring or bankruptcy in the 2008 or 2009 timeframe,” if it loses its court battle with Verizon OR Sprint Nextel Corp.

Posts: 233 · Posted: Sun Apr 01, 2007 11:00 am Post subject:

Personally, I wouldn't panic and I definitely would not sell my stock. Yes, as with any stock you are subject to turmoil and can attempt a prophesy based on events around you. But don't forget the judge should not ignore the good of the public. I did emphasize "should" because everyone one knows when you step in a courtroom it all depends on how good your lawyer can sell you. History dictates that a good lawyer can get you out of any bind even if you are guilty (I don't think Vonage is guilty.)

Anyway, let's take another angle. What if the judge decides in favor of Vonage or at least comes up with an extremely reasonable solution. He could make it unattractive for Sprint to continue their attempt to step on their pain in the heel. If that happens, then I suspect Vonage will be very attractive. Business history has taken many twists and turns. Many companies have dipped into the fire several times and ended up on top of the mountain.

Another option which I don't think will happen would be a buyout. If Vonage's financial stance is in the shape I think it is, then the buyout would have to be overpriced. In other words the offer would need to be attractive. Other than the pesky injunction, the ruling is much less than Verizon wanted and doesn't really have the affect they wanted. Remember, they want to stop anyone else from getting ahead in the race. If the injunction goes away I am not sure Sprint could have any significant success.

For an example, I will present the craze over Unix and Linux. The strategy in that witch hunt definitely turned against the claimant and you don't hear much any more. A few companies caved and paid money. But no real damage came to the consumer. In the end Unix and Linux survive until 2038. Lol

Posts: 144 · Posted: Sun Apr 01, 2007 11:41 am Post subject:

galion wrote:

For an example, I will present the craze over Unix and Linux.

The analogy would be more like "Vonage re-uses patented plain old telephone technology and in turn does not charge for its services."

There is yet one more scenario we had not considered much: a partnership/merger with another VoIP company that could complement Vonage. Idea

Voilà... two days ago Vonage and VoIP Inc signed a deal.

"Vonage has, in a semi-secret move that looks like it could be a workaround to the Verizon patents it's been convicted of violating, signed a contract to use the network of rival carrier VoIP Inc.'s subsidiary Voice One Inc. Vonage doesn't have a network of its own." -- http://www.telecomweb.com/tnd/22451.html

But VoIP Inc does not look too healthy either. Their stock has been in constant depression since 2006 dropping from $2 down to a quarter. The entire management has been flushed a few months ago.

But this might work.

Posts: 233 · Posted: Sun Apr 01, 2007 1:01 pm Post subject:

Interesting deal with VoIP Inc. It does look like a possibility. I don't know what that does on the financial front. But it will let Vonage customers survive. I wonder how the judge will draw that information into his decision. You know he will find out about it and it will bear into his decision whether it should or not. If Vonage moves to VoIP Inc. as a carrier then Sprint could only push what happened in the past on their suit. And I still wonder how the Verizon suit will play into the matter. On the opinion front it still smells like the old boys don't want new kids in the sandbox.