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Vonage http://www.internetoutsider.com/
Vonage IPO: Next Up...Lawsuits?
Vonage_logo_2
http://www.internetoutsider.com/
Vonage IPO: Next Up...Lawsuits?
Vonage_logo_2 Vonage continues to impress.
* It fails to sell itself before pursuing an IPO.
* It fails to drum up enough institutional interest in its IPO.
* It offers to let its customers in on its IPO-and then sticks them with overpriced shares.
* It insists on upsizing its IPO and maintaining the $17 price, hosing everyone unlucky enough to get stock.
* It says its CFO will go on CNBC to address customers who have lost more on the IPO than they've ever paid in Vonage bills.
* It realizes that this might violate quiet period rules and cancels the CFO's appearance.
* It reportedly suggests it will pacify "alienated" customers by paying for their IPO purchases-thus alienating non-customers whose underwater stock won't be paid for.
Depending on how this bizarre customer-IPO-insurance plan is effected, it seems possible that Vonage will bail out alienated customers with money just raised from non-customers, thus adding injury to insult. (Where in the "Use of Proceeds" section of the IPO prospectus does it say, "A portion of the proceeds may be used to insure customers against IPO losses"?). Given the company's phenomenal cash burn rate, such payouts will reduce the time Vonage can remain in business without another financing, thus either hastening its demise or hastening IPO-buyer dilution.
And what happens if/when the SEC forces the entire IPO to be rescinded, something that seems possible at this point? How much cash will Vonage have left in the bank? (Approx. $175 million) How long will this last? (Approx. another four months at the Q1 burn rate). Will an IPO remain an escape option? (Who knows?) If not, what will?
Meanwhile, the stock continues to tank.
UPDATE:
The WSJ reports that Vonage now says it is going to go after customers who refuse to pony up for their IPO shares. This is fair-the customers should pay-but it won't help customer relations. How exactly will Vonage force its customers to pay up? By threatening to cut off their Vonage service? By, more likely, suing them? (And thus prompting any customer who hasn't yet cancelled because of their IPO losses to cancel because of the lawsuit). And, meanwhile, how will the sued customers respond? By paying up? By, more likely, collectively suing Vonage for blowing the IPO? It gets better (worse) all the time...
Read The Full Thread: CNBC reports...Vonage may REDO offering - Refund all Trades!
• Do you think the new Bloomberg article is going to increase the likelyhood that
• I know this sounds too good to be true, but apparently CNBC says that this is a posibility.
• Can you provide a link or other source. Please don't tell me "I just saw it on T.V!"
• sorry, but I did "see it on TV"
I am not making this up - they did not say it was
• Nah, i don't doubt you saw it, just wanted to read an article is all.
• I will check - it was a long segment (by CNBC standards) - so, I imagine that a link
• I searched all over CNBC and found nothing regarding this rumor. The latest news
• News Flash 06/02
HOLMDEL, N.J. (AP) - Further ending speculation, Internet
• Seeing that CNBC was the ones reporting that investors who did not want to pay for
• 1 in 1000.... I disagree...I think it is unlikely, but not that unlikely.
I
DMattingly posted "http://www.internetoutsider.com/
Vonage IPO: Next Up...Lawsuits?
Vonage_logo_2" on 06/02/2006 |
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