Vonage IPO

I subscribe to Vonage.  I like Vonage.  As a consumer, I love their business model.  I've been a Vonage customer for over a year now.  I don't understand the IPO.

Vonage has been bleeding cash for years now. With losses mounting to over $310Million since 2003 the company isn't even close to profitability.  This should make an IPO next to impossible by post-bubble standards.  Forrester claims that 15% of US households will have VOIP by 210.  That's why you shouldn't pay these analysts, they don't have a clue.  Services like VOIP over Wi-Fi will and bundled VOIP services through Cable will reach households into the 30-40% range (but that's for another post).

But that's exactly the reason why Vonage isn't really poised for an IPO.  Voice over Wi-Fi, WiMax and Cable will become the primary platform for communications.  What's more, phones are being replaced with IP services over computers, not to mention VOIP/Mobile handsets.  Phones as we know them aren't being used as they were just a few years ago.  I know people that don't even have a land-line anymore and rely on mobile communications exclusively.

Which begs the notion, who would invest in Vonage knowing that this non-profitable VOIP company is really only a first-generation player in the consumer VOIP space.  Guess we'll have to see.  Acquisition would be a better play here.

Comments

[tim]

i would have to agree.

land lines slowly going away. for the first time today i saw Earthlink advertising their new phone services.

crazy.