Vonage IPO

mesowarny writes "The street writes: Vonage Holdings, moved to become the first major Internet telephony player to go public by filing Wednesday to raise up to $250 million via an initial offering of stock and named a Tyco International executive as CEO. Our revenues were $18.7million in 2003, $79.7million in 2004, and $174.0 million for the nine months ended Sept. 30, 2005," the company's prospectus says."While our revenues have grown rapidly, we have experienced increasing net losses, primarily driven by our increase in marketing expenses. From the period of inception through Sept.30, 2005, our cumulative net loss was $310 million. Our net loss for the nine months ended Sept.30, 2005, was $189.6million. During the same nine-month period, our marketing expenses were $176.3million."

Comments

Re:Business voip?

[XorNand]

Wow. Strange timing. Might I shamelessly suggest a company that I'm part of: Bright Idea VoIP? :-) We focus exclusively on small business VoIP (between five and forty extensions). We also offer a unique reseller/partner program for IT support people if they're willing to provide first level support to subscribers.

/end plug

Increasing net losses???

[confusion]

I really can't wait to invest in a company that has "increasing net losses". It's like 1999 all over again. I know they're after some capital, but profits talk right now and I really can't see this going well for them.

Jerry
http://www.networkstrike.com/

marketing expenses a little excessive?

[egburr]

Our net loss for the nine months ended Sept.30, 2005, was $189.6million. During the same nine-month period, our marketing expenses were $176.3million."

Wow. Their marketing expenses totaled 93% of their net loss. I wonder how what their revenue and net loss would have been without all that marketing expense?.

Sounds like they aren't going to be able to maintain the all-you-can-use service for only $25 much longer.

Customers might get shares too

[Anonymous Coward]

Customers may be eligible for shares too! http://ipoinfo.vonage.com/

Power outage?

[Anonymous Coward]

I'm not trying to troll, but what happens to your VoIP service when the power goes out? Are you SOL? This is one (among other) things that has me passing on Vonage and others.

Skype and Google Talk are not the issue

[MadDogTannen]

To all the people who think that Skype and Google Talk are going to put Vonage out of business, you have to realize that Vonage isn't selling VOIP... they're selling Primary Line Replacement. Their customers expect their Vonage phone service to work exactly like their regular phone service, so they absolutely need to be able to terminate to PSTN, as many Vonage customers will be replacing their primary phone service with Vonage. This is why 911 was such a big deal for VOIP not that long ago... because for many VOIP customers, their VOIP phone line was going to be their ONLY phone line.

I work for a VOIP company, and I would say that the biggest threat is the big Telecoms that can squash VOIP either by messing with the packets that travel over their wires to destroy QoS, or by pushing the goverment to regulate VOIP out of business. Actually, this is one reason why the company I work for is glad that a big company like Vonage is around to look out for the interests of VOIP companies.

Vonage is bleeding money in marketing and practically giving away their service (including the VOIP devices that they give to their customers -- which I guarantee is not cheap), and it's questionable whether they'll ever be profitable, even if they tailor back their marketing efforts.

I would stay away from Vonage as an investment opportunity, for no other reason than VOIP is fighting an uphill battle against the telecoms. Even if VOIP can survive the war with the major telecoms, there are a lot of companies trying to break into this market, and Vonage may find themselves paving the way for another company to claim dominance over the VOIP world, especially if they can't find a way to make themselves profitable soon.

Re:Skype and Google Talk are not the issue

[bshensky]

What if? That's a loaded question. I think the value inherent in VoIP also includes (and I failed to mention this before) its basis on an open standard: SIP. SIP runs most VoIP, like HTTP runs the Web (for the most part). SIP gives "presence management" wings to fly, and helps foster competition in a growing field. There are SIP gateways out there that bind PSTN 10-digit numbers to SIP points of presence (your 10 digits). Other SIP gateways manage the inbound PSTN call thru virtual PBXs to whereever you may be. The flexibility is endless. Ultimately, though, what matters is the 10-digit number - it ain't going anywhere. Any viable VoIP solution *must* account for incoming and outgoing calls to/from a 10-digit number.

Now, Skype is really good at what it does, but open it ain't. And while Joe Phoneuser probably doesn't care about open standards, the industry does, because it fosters a lower cost of entry to the market, and feeds more Davids to take on the telco Goliaths.

What if...part 2: Like other Vonagefolk, I pay a low flat rate for VoIP service. I'm really put off by the nickel and diming Skypeout insists upon.

I realize these points are above and beyond - after all, Vonage runs a SIP-based walled garden that is effectively no better for a hobbyist like me than Skype. In the end, be it for Vonage, Skype or whoever, I still enthusiastically support VoIP or any other industry that stands as a viable alternative to the incumbent monopolies. I refuse to let the eMan put me down!

Re:this could be a dangerous IPO

[mattkinabrewmindspri]

Sunrocket is a lot cheaper than Vonage, and has very good service. Here's what is included in the $199/year(~$17/month) price:

• unlimited to the U.S. and Canada
• $3.00 of international calling included per month (3 cents a minute to many countries)
• two free 5.8GHz phones
• voice messaging
• call waiting
• two phone numbers
• caller ID
• call waiting ID
• selective call blocking
• selective call forwarding
• selective forwarding after a certain number of rings to a different number
• check voicemail online
• no contract
• call logs
• distinctive rings you can set up
• no cancellation fee

I've had their service for two months now, and it's been great.

Re:this could be a dangerous IPO

[Anonymous Coward]

Sure, it could cause problems. It depends on the sanity level of our court systems, and just how greedy some people (like, say, Verizon) plan on being. The backbone providers are upset because people are using their lines to provide services, as a "free lunch".

As Heinlein said via Manuel, "TANSTAAFL. There Ain't No Such Thing As A Free Lunch." The problem from my point of view is that the backbone providers, and the wired telcom infrastructure companies, are under the impression they should be paid twice. Once by me, paying for their service either directly or through my ISP (which leases lines from them), and then again by the company I'm doing business with (which also pays them via their ISP).

It's tantamount to BellSouth (I'm in Florida) charging me based upon the content of my phone call. If I call my friend to set up a movie date, it's residential rates. If I close an insurance contract, I should pay them for the call as my residential service and my insurance company (Progressive, let's say) should pay them for the privilege of them providing the connection that let me close the deal.

To me, the backbone providers are hunting the wrong people. If they want more money, charge more for leased line and broadband access to their networks by ISPs. They are the first level. They charge the ISP, which then charges the end consumer. They should not attempt to charge the ISP *and* the end consumers. Whether that consumer is me, Steve Ballmer, or Google, makes no difference in the world. (Except in bandwidth cost overruns... I'm pretty sure I don't take up as much bandwidth, no matter how many torrents are running in the background.)