Vonage: Losing Money & Getting Stiffed

Aug. 2.06 | About: Vonage Holdings (VG)

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Vonage Customers Withhold Payment For IPO Shares

  • Summary: Despite quarterly revenue increasing dramatically to $143.4 million from $59.4 million (from the same period last year), Vonage's quarterly loss widened from $63.6 million to $74.1 million ( $1.16/share) for the same period. Vonage forecasts full year revenues of $600-$615 million, with marketing costs of $360-380 million (over 50%!). Adding insult to injury, customers are refusing to pay for shares (over one million) that they purchased in the IPO this past May. Vonage indicated that it will initiate collection efforts against those customers.
  • Comment on related stocks/ETFs: Vonage closed at $6.70 yesterday, down from the $17 IPO. With no dramatic changes in Vonage's business model, Chad Brand is wondering why investment bank price targets for the stock remain between $9-$11/share.