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Print 21 comment(s) - last by Alphafox78.. on May 25 at 3:59 PM
Vonage has a hard time convincing analysts and investors that it'll do well going forward

This week marked the debut of Vonage on the stock exchange market. The company announced its initial public offering (IPO) to raise funds for expansion and development. Unfortunately, at the IPO, while most other companies see a huge increase in investments and stock price, Vonage's stock price takes a massive beating.

Analysts are saying that they are having difficulty finding reasons why Vonage is competitive to other similar services. Some are predicting that costs will be raising this year and Vonage's advantages are still small compared to some others. During its opening day, Vonage shares dropped $2.15 which is over 14%.

Investors were also looking at Vonage's financial performance, which has been dismal since the company launched in 2001. Up until March 31st of this year, Vonage was still reporting losses and had been reporting losses every single quarter. Many analysts previously predicted that Vonage's IPO would actually be lower than what it managed on opening day. They were surprised to see that Vonage had actually manage to raise half a billion dollars. While companies like Vonage are likely to recruit more customers as more people opt for high-speed Internet, cable and telephone companies are beginning to put together very attractive data/voice packages.

Investors tend to make most of their decisions on forward-looking statements. Unfortunately for Vonage, analysts predictions are going into a bad direction.

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Hmmm...
By Locutus465 on 5/25/2006 12:06:44 AM , Rating: 2
Yeah, my options for VOIP were Time Warner for ~$40/mo or vonage for ~$25/mo (both excluding taxes). Vonage was the easy choice, I'm not exactly sure where these "attractive" packages Anaylists are looking at are, but Time Warner sure doesn't have one.




RE: Hmmm...
By Furen on 5/25/2006 12:29:24 AM , Rating: 2
It may not have one yet but it can at any time it wants to, the same with the telcos. Vonage is stuck between a rock and a hard place because it depends on another service to provide its own and those who provide this other service (broadband) could conceivably provide VoIP service at lower costs since they are already paid for part of the bandwidth required for VoIP. To tell the truth the best thing that could have happened to Vonage would have been to be bought out by one of the Telcos. It didn't happen hence the IPO, though it could still happen, but I'd guess any offers will come until after the stock devaluates a bit more.


RE: Hmmm...
By SkAiN on 5/25/2006 1:35:35 AM , Rating: 2
I used to think the same thing, that Comcast would offer VoIP service for significantly less since they already own the cable infrastructure.

However, I was wrong... just got a postcard the other day advertising Comcast Digital Voice starting at $40/mo. (before taxes)... Disappointing indeed.


RE: Hmmm...
By Furen on 5/25/2006 2:24:11 AM , Rating: 2
They don't offer a compelling VoIP service because they don't want to compete with their digital phone services (which, though they use the same cable infrastructure, do not use an IP protocol) and they haven't experienced any sort of mass customer migration to VoIP.

Regardless, there are lots of uncertainties with Vonage's operations. For example, there's the recent FCC strike down of net neutrality. There's the E911 thing, there's the fact that the company has NEVER been profitable... I certianly wouldn't want to throw money at such an uncertain business considering that the potential is not all that great because Vonage is not unique in any way (nor does it have IP to protect its business... that I know of).


Why the $25 plan?
By Milliamp on 5/25/2006 8:30:37 AM , Rating: 2
Why do so many people not use the $15 plant that comes with 500 long distance minutes a month? Do all of you really make that many long distance calls?


RE: Why the $25 plan?
By Lifted on 5/25/2006 10:24:51 AM , Rating: 2
Because it's not 500 "long distance" minutes, it's 500 minutes. You pay for every minute after that, local, regional or long distance.


RE: Why the $25 plan?
By Alphafox78 on 5/25/2006 3:54:21 PM , Rating: 2
thats what I use, I rarely use the house line at all. I have 1400 cell minutes, its just nice having a house phone. it was either verizon BASIC BASIC for $29, or vonage 500 minute with all the nice extras. no brainer for me.


huh....
By eheia on 5/24/2006 11:40:30 PM , Rating: 3
this suprises me. I personally use vonage. they have a great product at a significantly lower price than most of their competition. i guess for $30/month (including all taxes and fees) i dont know where you can get the same features. It would seem to me that they would be doing much better than this.




RE: huh....
By geeg on 5/25/2006 7:13:00 AM , Rating: 2
You have not tried skype then..


RE: huh....
By creathir on 5/25/2006 12:33:20 PM , Rating: 1
And you've not tried SIP...
- Creathir


Almost bought stocks.
By AllYourBaseAreBelong2Us on 5/25/2006 10:28:11 AM , Rating: 2
I'm a Vonage customer and I was going to buy 200 stocks but, after I read the company profile and the quartely results I decided not to buy. I'm glad I didn't.




RE: Almost bought stocks.
By Marlin1975 on 5/25/2006 12:04:32 PM , Rating: 2
Down another 11% so far today. Would have been a good stock to short. But I am sure it will bounce back a little and then of course really bounce around on "rumors" of xyz company to buy vonage etc...


RE: Almost bought stocks.
By daveyd on 5/25/2006 1:16:26 PM , Rating: 2
So, would it be worth to buy Vonage stock now at a pretty low price? Any thoughts on the stock skyrocketing over the next couple years?


Skype
By proamerica on 5/25/2006 10:21:35 AM , Rating: 2
Never used Vonage, but I use Skype and it works great. Skype is free for skype to skype calls, and until the end of the year its free to call landlines and cellphones. The video chat function on skype works great as well. I've heard of people who had trouble wtih skype's service but my experience with it has been very positive. Can't complain really being that its free.




RE: Skype
By Bull Dog on 5/25/2006 10:37:03 AM , Rating: 3
But you can't receive calls from land lines now can you?


Too Expensive
By xKelemvor on 5/25/2006 8:47:55 AM , Rating: 2
The only reason people I know use VOnage is that's the only VoIP company they know of. But for VoIP companies, they are the msot expensive one out there. Most tech people I know use other companies. I personally use Sunrocket. Their normal deal is $199 per year which is under $17/mo all inclusive. And they always have deals going on for 3 free months or a free second year or things like that which bring the price even lower.

Vonage is te only VoIP company that has a huge advertising campaign (which is probably part of why they lose so much money each year) but they have gotten their name out there and people know who they are.

It's just like people who buy Monster Cables from Best Buy instead of getting the same quality cables for a fraction of the cost online. The brand is out there and people have a false sense of thinking it really is the best.

I'm not surprised by this at all and actually think it's pretty funny. After all the things I've heard about Vonage as far as not letting you cancel and things like that, I'm somewhat glad they took a beating.




RE: Too Expensive
By Alphafox78 on 5/25/2006 3:59:39 PM , Rating: 1
Did you read the other threads? they are actually way cheeper than bundling your phone it with cable.. $40 with comcast, $25 with vonage. how is that more expensive?


Dissapointing
By FujiT on 5/25/2006 1:50:32 AM , Rating: 2
Several of our company leaders went to wall street to ring the bell and we had a huge celebration for our stock going public. I was really dissapointed to see how much the stock dropped in one day. Our engineers work hard to hopefully our overall market share will increase and our overall company value will go up.




$0.02
By XtremeM3 on 5/25/2006 6:17:21 AM , Rating: 2
I am a Vonage user as well and I saw the announcement going public early as I'm sure most other Vonage users saw. I declined the offer of jumping on board despite my initial thought that it would be a good idea. After reading into anything though I came across some troubling thoughts. With Vonage never having made a profit, although due to marketing expenses and trying to increase growth, it's hard to put money into something. For me anyway. I'm no economical expert or anything but to me if you are outright saying "We have never posted a profit and don't expect to anytime soon becaues we want to put everything into marketing and growth" that hits me as a HIGH risk investment. Yes it could grow into something, but I'm going to have to ride the storm out until it does - if it does. If this was a great new company or something exclusive then maybe, if I really saw it taking off. Vonage is not a pioneer in the VOIP market to my knowledge. There are too many competitors for me to say that Vonage will be the winner. Also while ISPs are offering VOIP service at a higher price, you'd be suprised how many people will go with them over either 1. Ignorace or 2. Simplicity's sake. Not all people are "techies" and alot will be told "How would you like to have unlimited long distance calling for 40 bucks?" and they will jump all over it(i could see my poor parents doing it and calling me about the great deal they got -sigh-). Not to mention just tossing that onto what you're paying for your cable already instead of a whole other bill. And Skype(which is not e-bay's) is fighting hard out there as well.

For me there was just too many risks that I - the average Joe - was not willing to take. I wish the company the best as I have no complaints on service (even though i rarely use it and only got it for the soft-phone for when i travel as I already had Packet 8. I was going to switch to vonage if I liked it but never got around to cancelling my packet 8 so yes i pay 40 bucks a month to use it for a week or 2 every couple months - but now that is about to get cancelled thanks to skype)

Anyway that's just my take on it. Its a shame I hoped that they would do well, but I can't say I'm suprised about what happened.




No need for any of it
By zsdersw on 5/25/2006 9:45:37 AM , Rating: 2
Like many people, I have no need for a landline phone through the telco or my broadband Internet connection. I simply use my cell phone for everything.. and couldn't be more pleased.




The reason i use vonage over others
By ncage on 5/25/2006 3:29:44 PM , Rating: 2
The reason i use vonage over any other VOIP is because of QOS hands down. When i was going this route i reviewed a few others and went with vonage because of QOS and vonage seemed to have as many features if not more than others. Ive been pretty happy with them so far but just because i like a company doesn't mean im going their stock. I think it would be just as easy for another company to jump and steal market share from them. Its not like their model would be hard to follow.




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