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Vonage going IPO

Posted by ryuzaki0 on

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."

3 of 221 comments (clear)

  1. Sounds great ... but. by grunherz · · Score: 5, Informative

    I'm a Vonage customer since 2004 and I received the IPO e-mail a few days ago. If you're in the same boat I highly recommend reading their risk prospectus first. They will be posting losses for the foreseeable future.

    Not a deal-breaker but just a heads up.

    --
    Four weeks, Twenty papers, that's two dollars ... plus tip.
    1. Re:Sounds great ... but. by imadork · · Score: 5, Insightful

      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....

  2. Common misconceptions by artemis67 · · Score: 5, Interesting

    I got the offer from Vonage, too, and I'm debating it. I haven't done the research on it yet. However, it's a common misconception that companies that are experiencing explosive growth should be rolling in the cash. Rapid growth is actually quite expensive, because the company is having to dramatically increase its size in order to keep pace.

    Secondly, debt is not necessarily a bad thing for businesses; in fact, it's a positive. I won't go into all the details, but suffice to say that it increases the earning power of the money supplied by the shareholders.

    Third, debt is a much cheaper form of financing than equity offerings. It's only natural to expect Vonage to use as much debt as is available to them before they launch an IPO. Think of this, also -- with an IPO, the current Vonage stakeholders are giving up a lot of control over their company. So really, the fact that they are conducting an IPO should really raise more questions than the fact that they have a lot of debt.