VoIP start-up Vonage Holdings Corp. is reportedly planning to file for an initial public
offering (IPO) that could fetch as much as $600 million for the company. That is, if
investors are willing to drink Citron-flavored Kool-Aid. If history is a guide, they
will. Willingly.
Over the last three years Vonage has signed up customers buying more than 800,000 VoIP
lines, raised $400 million in venture capital and ramped its operations to count 1,500
employees. But this has occurred during the “low hanging fruit” phase of the VoIP
market’s development. With cable’s VoIP rollout ramping and the Bells following suit,
Vonage’s free ride is coming to an end.
Driven by smash-mouth CEO Jeffrey Citron, Vonage has spent lavishly on marketing as part
of a VoIP market land grab. Citron’s brash “we’ll bankrupt the Bells chatter is
reminiscent of Dave McCourt, the former CEO of RCN, the cable overbuilder now struggling
to emerge from bankruptcy.
Frankly, the most exciting thing about a Vonage IPO, will be the opportunity to examine
the company’s financials and watch Citron work to meet Wall Street’s numbers each quarter
under the full light of day as public company.
For everyone that lived through the “Internet Bubble,” hearing the hype around a Vonage
IPO and watching Google trade at $285 a share is like deja vu all over again, as Yogi
Berra would say. Google’s plan for a secondary $4 billion stock offering while it already
has $3 billion in cash on its balance sheet is the icing on the cake. On the heels of its
IM launch into IP communications, maybe Google should simplify the equation by just using
its inflated stock to buy Vonage directly at an irrational valuation?
http://blog.cabledigitalnews.com/index.php?id=260
offering (IPO) that could fetch as much as $600 million for the company. That is, if
investors are willing to drink Citron-flavored Kool-Aid. If history is a guide, they
will. Willingly.
Over the last three years Vonage has signed up customers buying more than 800,000 VoIP
lines, raised $400 million in venture capital and ramped its operations to count 1,500
employees. But this has occurred during the “low hanging fruit” phase of the VoIP
market’s development. With cable’s VoIP rollout ramping and the Bells following suit,
Vonage’s free ride is coming to an end.
Driven by smash-mouth CEO Jeffrey Citron, Vonage has spent lavishly on marketing as part
of a VoIP market land grab. Citron’s brash “we’ll bankrupt the Bells chatter is
reminiscent of Dave McCourt, the former CEO of RCN, the cable overbuilder now struggling
to emerge from bankruptcy.
Frankly, the most exciting thing about a Vonage IPO, will be the opportunity to examine
the company’s financials and watch Citron work to meet Wall Street’s numbers each quarter
under the full light of day as public company.
For everyone that lived through the “Internet Bubble,” hearing the hype around a Vonage
IPO and watching Google trade at $285 a share is like deja vu all over again, as Yogi
Berra would say. Google’s plan for a secondary $4 billion stock offering while it already
has $3 billion in cash on its balance sheet is the icing on the cake. On the heels of its
IM launch into IP communications, maybe Google should simplify the equation by just using
its inflated stock to buy Vonage directly at an irrational valuation?
http://blog.cabledigitalnews.com/index.php?id=260
