As long as your broker doesn't actually try to use Vonage to place the buy order, I think you'll be fine.

With its dubious financial history – a net loss of $85 million on revenue of $119 million in its most recent quarter and a loss of $261 million on revenue of $269 million in 2005 – leadership questions, a founder with a history of SEC troubles, and a list of rivals that includes everyone from Skype to AT&T, you’d think that Vonage’s forthcoming initial public offering would be an anathema to most investors. Well, think again. According to filings with the Securities & Exchange Commission, Vonage plans to float some 31.25 million shares at $16 to $18 apiece and, according to least one report, investors have oversubscribed for the IPO. But why? Vonage will always be a pioneer, but its days as an industry leader are long over. Like TiVo, Vonage is being elbowed out of the market it created by cable companies bundling similar VoIP services with their existing products. “Right now it’s a perennial money loser,” said Jon Arnold, an independent VoIP consultant at J Arnold Associates. “And the growing competition also makes life harder for Vonage.” Jeff Halpern, a telecommunications analyst at Sanford C. Bernstein & Company, was even more skeptical of the company’s future. “Vonage is not the company people are going to identify with voice-over-Internet phones six months from now,” he told The New York Times. If this is truly the case, then why is the company’s IPO oversubscribed? I’ve no idea, really. Perhaps it’s the company’s fanatical customers queuing up to take advantage of the company’s Directed Share Program (see “Now why couldn’t Google have done something like this?“). But more likely it’s speculators hoping the company will end up being acquired by a telecom or cable outfit after its IPO. “I think that’s the reasonable exit strategy, ” American Technology Research analyst Albert Lin told Reuters. “Even after the IPO, it will be a considerably small company.”

 
 

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  • William Terrill

    I used Vonage a couple of years ago — absolutely terrible customer service. Two months ago I decided to give them a try once again. I bought a retail adapter for my broadband network and brought it home. The instructions directed me to a web site to initialize my service — unfortunately the web site had no clue that you could purchase an adapter anywhere but on the site.

    A call to their customer service site (clearly in India from the heavy accent, the poor quality of the connection, etc.). The person on that end explained that Vonage does NOT sell adapters at retail outlets. She then tried to sell me another adapter! After a while I convinced her to transfer me to tech support.

    Same story — tech support also informed me that Vonage does not sell adapter in retail and, at that point, I thanked him and hung up. I’m using Packet8 and encouraging everyone that I know NOT to waste their time with Vonage.

    Oh, and Vonage kept my name on their customer list for over 8 months after I had canceled their service the first time. They then began to charge me again after nearly 6 months!!

    Not a company to be trusted with your credit card information. It took a long time to get those charges reversed!

    Bill t.

 
 
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