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Vonage going IPO
Diashto writes "I just recieved voicemail on my Vonage phone saying that Vonage is going IPO, and that certain customers may be eligible to purchase common stock at IPO pricing. More information is is available on their IPO site."
I'm out of mod points, so I'd like to reiterate that I looked into this, and I'm not going to touch it with a 10-foor pole. They spend almost every dollar in revenue they make on marketing, and borrow money to keep their business running. IIRC ( I don't have the prospectus in front of me), but they made $250 mil last year and spent close to $400 mil. When you combine their assets and their debts together, the company is worth less than zero. But this IPO will raise something like $400 mil, and since they're offering about 20% of their outstanding stock they're effectively valuing the company at $2 billion. It's not 1999, folks. It might be possible to buy in at the IPO price, and then flip it for a gain that day. But I like my odds in Vegas better. If you like the long-term prospects, wait a little while and I htink the price will dip below the IPO price....
The Prospectus and Risk Factors have some interesting tidbits:
1. Their CEO (and top officers) have 6 digit salaries with bonuses that are larger than the actual salary
2. In order to succeed (in their words) Vonage will need consumers to move away from traditional phone lines in favor of Vonage. [Without E911, this is be VERY difficult indeed - and the telcos are not likely to willingly give up their business by giving Vonage access to their E911 systems...even if the FCC says they have to.]
3. In order to succeed (in their words) Vonage needs their competitors to *not* come up with products as good as or better than Vonage's own product. [While this seems intuitive, just think how long it will be - if digital phone takes off (#2 above) - before the cable companies offer equivalent or better offerings with guaranteed QoS for their digital phone service]
I also am not going to take this offer for two reasons:
1. I have to buy at least $100 shares which is more than I can afford at the moment, and
2. I think the price will go down after the first day or two.
...and that's the way the cookie crumbles.