Now, Vonage Says Customers Still Have To Pay Up For Shares

from the not-so-fast dept

With its stock price tanking following its IPO, the news that made the rounds yesterday that Vonage indemnified its underwriters and would cover the cost of shares allocated to customers who now don't want to pay up led to speculation that they'd be let off the hook. However, Vonage has moved to make it clear that isn't the case, and that it expects everyone who was allocated shares to pay up. This is certain to cause them a few problems, both from customers who want to get out of their obligation because of the falling stock price, as well as those alleging problems in the allocation of shares and ended up with shares when they thought they were receiving none. Vonage's IPO has been a financial mess, but the real fallout will be in the lingering damage it does, both to the company's balance sheet and to its reputation with customers.

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  1. identicon
    Anonymous Coward, 1 Jun 2006 @ 1:10pm

    Very true on the stock issue

    The fact is, it was widely questioned in the media why this IPO was happening, and why it was happening at what was largely believed to be grossly over priced.

    Current status - that's life for the experienced speculators that jumped in, becasue we all know crazier things have happened with tech IPO's then what so-called analysts expected.

    But to the unitiated investor/customer that jumped on Vonage's BS Spam to drive and get more people to buy into the IPO, I feel very sorry. Of course their stuck paying for what they comitted to, and I guess it's caveat emptor, but I still feel bad that they were duped by a company that you'd hope you could trust.

    Here was my logic - the big IPO's of recent years, i.e. Google, were multiple times overcommitted. In other words, they had many times more investors lined up and committed to buy shares than they ever could have sold to. There was no chance in a million years of the "average joe investor" getting in on that action. But Vonage is voicemail and email spamming customers with a "special offer" to get in on the IPO? WTF? Doesn't it tell you something is wrong when the educated investors with money aren't interested, at least not at the price you're offering?

    It never should have happened. Desperate ploy to keep a poor company alive, unfortunately. Hopefully thing will remain competitive out there and someone will have a quality offering at a competitive price, but these guys are sunk, no question, unless someone with extremely deep pockets bails them out. It's not a matter of if, it's a matter of when.

    Watch them p**s away all of their IPO money on ads, then fail to deliver to all of their new customers. They don't have the infrastructure to support the customers they have now, they'll be even worse off if a bigger ad campaign succeeds!

    This one's going down in the history books, for sure. Somebody buy the rights to the book now - the rise and fall of Vonage. It will be a good story, for sure.

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