Vonage IPO Rings Up A Loss
Not since Lumera Corp’s IPO in July 2004 has a company IPO fallen as much as Vonage did in its first day of trading on Wall Street.
Skype announced it would provide free calls to any US or Canadian number with its software through the end of 2006. AOL released AIM Phoneline and free inbound calls and voicemail a couple of days later.
Anyone fortunate enough to grab an AIM Phoneline number before the supply dried up (temporarily according to an AOL spokesperson) could conceivably use that and Skype and enjoy at least six months of free phone calls in and out right now.
At minimum, the Skype offer presented yet another factor along with Vonage’s other issues – customer service, FCC e911 compliance, increased competition, and net losses on the balance sheet – to challenge an IPO.
Vonage didn’t meet the challenge. In trading on its first day on Wall Street, the opening price of $17 per share fell to a close of $14.85. That 12.6 percent plunge hasn’t been seen since Lumera’s shares shrunk smaller than its nanotechnology, a 13.5 percent plunge according to Thomson Financial via the Wall Street Journal.
The company spends greatly on marketing efforts. Those include sponsorships of the Jammys live music awards, the Tribeca Film Festival, and the Andretti Green Racing Team.
Apparently the spending will continue. In the Vonage prospectus, the company provided an advisory that it will not cut back on efforts to attract customers to its service.
Shareholders may demonstrate that famed Wall Street impatience and demand stronger measures from the company to bolster its value.
David Utter is a staff writer for WebProNews covering technology and business.