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Print 16 comment(s) - last by xKelemvor.. on Jun 7 at 9:00 AM
Vonage's stock debuted on the NYSE on May 24, but had lackluster results

The problems for Vonage seem to just keep piling up.  The company recently went public on the New York Stock Exchange (NYSE), but has taken a severe beating after shares dropped around 30%.  It has now been reported that a class-action lawsuit has been filed against the company in the U.S. District Court in New Jersey.

The lawsuit by South Carolina-based Motley Rice accuses Vonage of improperly selling shares to customers and violating securities laws.  The securities law "requires that a company recommending the purchase or sale of its securities to a customer must have a reasonable basis for believing that the recommendation is suitable for the customer."

Because Vonage set aside a portion of its shares for customers to buy, the company also realized that institutional investors who normally buy IPOs would most likely not be willing to purchase shares at the stated price.  Some shareholders are now threatening to not pay for the shares they were allocated by Vonage.  The IPO price of Vonage stock when it was first introdyced was $17 -- however, the stock closed at $12.32 on Monday evening after a brief rebound.

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just one more reason
By nwyman on 6/6/2006 7:51:16 AM , Rating: 2
Why I don't play the stock market. In a market where the Martha Stewart's and Lay/Skilling's of the business world get a slap on the wrist, I'm not sure I want to give any of my hard earned money to them or their ilk.
Oh, that and I also don't have any money :)




RE: just one more reason
By segagenesis on 6/6/2006 8:11:37 AM , Rating: 3
Really bad pun here but you mess with the bull you get the horns. I'd be very tempted to say "cry more n00b" to these people because everyone now assumes that hot tech IPO = free money. The stock market has not changed in over a century, there are certain risks involved no matter how good something looks... I can only imagine people tried to get in on this and expected it to hit $200 a share the next day because every other tech stock IPO does this. Oh wait...



By Master Kenobi (blog) on 6/6/2006 8:52:24 AM , Rating: 2
Agreed, sounds like they are just crying like a buncha newbs.


RE: just one more reason
By rrsurfer1 on 6/6/2006 10:19:55 AM , Rating: 2
I think it was totally wrong of Vonage to allow customers buy-in on the IPO, and especially wrong to suggest customers purchase it. Then the flip-flop they did over considering customers to sell back their shares just added insult to injury. IPO's are ALWAYS high risk, I don't see why Vonage would suggest their customers incure this risk. Now not only do they have a low stock price and a lot of bad press, but also many Pissed Off customers that will probably not be customers much longer...


RE: just one more reason
By Targon on 6/6/2006 12:05:33 PM , Rating: 2
It's not all that different from letting employees get in on an IPO or one where employees can get one friend in on an IPO. Is it wrong for an employee of a company to recomend to friends to buy a stock when it first goes public, since it's ALWAYS speculation that the stock will go up on opening day?

So, Vonage planned to go public, and to "reward" current customers, they made it possible for these customers to get in on the IPO(which normally isn't easy or possible for most people). Nothing wrong with what Vonage did, and if the stock went up, no one would have complained. If Vonage stock goes back up(which is possible), then these people won't have a valid complaint.

When it comes to the numbers, Vonage is is growth mode, which means they put a LOT of money into buying new equipment to satisfy the increasing demands of their customer base. There will come a point where the size of their customer base slows in growth, and that will allow Vonage to cut back on equipment purchases. At that point, Vonage will start to make money and the stock will go up.


Service providers ALWAYS go through a period where they invest a LOT of money in infrastructure, and where it all seems to be one big expense to provide a service. Once that period is over, the company makes a TON of money.

The old Bell telephone service got a LOT of money from the government to roll out the service and perform equipment upgrades. If it wern't for all that money the government GAVE them, Bell would have seemed to be making no money as well since all the money they got would have gone back into equipment purchases and upgrades.


RE: just one more reason
By ghuoof on 6/6/2006 3:50:59 PM , Rating: 2
commie


RE: just one more reason
By TomZ on 6/6/2006 8:51:41 AM , Rating: 2
The stock market should be left to the pros. What the average naive investor doesn't realize is that the pros are working all day long on this stuff. They also have research staff, specialized software, well-developed strategies. This doesn't bode well for an average Joe like you or I trying to dabble in stocks. Yes, I know money can be made, but I think in the majority of cases, average Joes actually lose money.


RE: just one more reason
By Micah on 6/6/2006 9:27:43 AM , Rating: 2
A while ago, my dad called me and asked, "Should I get in on this Google IPO?" My answer was, "Hell no! You don't know squat about the company or where they're going." History has proven me dead wrong.

Good thing he didn't call me about Vonage. I probably would have given him some more bad advice, like "VOIP is the way of the future, so definitely invest in any VOIP company you can get in on!"

Yet another reason I choose index funds over stocks. I guess it just means that my investments track "the economy" and not any one single business or sector.


Yeah, but
By Trisped on 6/6/2006 3:47:15 PM , Rating: 2
When they announced it many analysts believed the stock to be way over priced. And so we see, it was. Vonage isn't even a good bear stock, because you don't know if the company will be there in a year or 2.

Really just a waste.




RE: Yeah, but
By FujiT on 6/6/2006 4:42:18 PM , Rating: 2
We'll still be here. We are still growing; the rate at which we are growing is not as fast as we used to be, but the cost of marketing/subscriber is going down, and we are hiring a lot of people to improve services.


RE: Yeah, but
By rushfan2006 on 6/6/2006 4:52:46 PM , Rating: 2
quote:
We'll still be here. We are still growing; the rate at which we are growing is not as fast as we used to be, but the cost of marketing/subscriber is going down, and we are hiring a lot of people to improve services.


Well time will tell, just in the last year alone a lot of VoIP companies have popped up, so now you are getting more and more competition. My hold out for VoIP partial ignorance on my part I'll admit -- I like wall mounted phones for my house, I don't want to drill holes in my wall in the kitchen to run cat 5 to my router just to use a stinking phone that I spent less than (sad thing is I'm not kidding either) two hours PER WEEK on anyway. Get a wall mount phone that is fully wireless to the PC connection and operates at LEAST 2ghz (5 ghz preferred) and I'll think about it. Secondly, I don't like the strange 911 service that is available that has to be improved.



RE: Yeah, but
By FujiT on 6/6/2006 11:17:23 PM , Rating: 2
Having wall mounted phones like that are expensive. The Cisco 7960s that a lot of people use are like $450. Go to (http://www.vonage.com/products.php?lid=nav_product...) We offer a lot of phones that are wireless. Granted, they come with a price, but we also have a WiFi phone that works with wireless routers.

And that strange 911 service is called E911. Basically you don't have to tell the 911 operator where you live anymore becuase where you live is automatically fowarded to the operator. That's why if you call 911 and hang up, there's a pretty good chance that a cop will show up at your house.

I'm pretty sure that our E911 service is rapidly improving. We can offer most of the customers with E911 service although there are areas where coverage is pretty low. We have teams of people who are working on E911 and they tell me that it's a pain to work with because you have to work with a large database.

And the drilling cat 5 part, it's kind of a universal problem. For every AT&T phone that we use, we have to use an MTA. So we deal with it.


RE: Yeah, but
By Zelvek on 6/7/2006 12:27:20 AM , Rating: 2
I have heard that you only need to buy a modem sized box to convert your current phone to vonage. My question is can you put multipile phones on one box if so then one can just patch their main line into the box and won't have to run any cable at all. Also I find the sirvice sort of dumb as most people get internet from their phone company and end up getting a discount by having the two (though vonage is still cheaper). most people don't realize that the "phone company" will still need to be delt with in most cases.


Friends
By xKelemvor on 6/6/2006 9:36:38 AM , Rating: 2
Friends don't let friends use Vonage...




RE: Friends
By Vertigo101 on 6/6/2006 11:34:53 AM , Rating: 2
Why not? I'm with Voip.net right now (reseller for Broadvox), and it's fantastic. I'd have gone with Vonage if I could, but they didn't have local numbers in my area.


RE: Friends
By xKelemvor on 6/7/2006 9:00:09 AM , Rating: 2
High prices, craptacular customer service, giving people the run around when they want to cancel....

I use SunRocket and have lower prices, better service, etc. Everyone I know that uses Vonage that ever had to call them had nothign but trouble.


"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer











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