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
    eric, 1 Jun 2006 @ 8:14am

    first

    let me reiterate: bone-age

    reply to this | link to this | view in thread ]

  2. identicon
    Jezsik, 1 Jun 2006 @ 8:21am

    Refreshing, a "first" post worth reading!

    Good one

    reply to this | link to this | view in thread ]

  3. identicon
    Sam, 1 Jun 2006 @ 8:27am

    One more company about to bite the dust because of doing things without proper business sense! Oh well it is capitalism at it's best

    reply to this | link to this | view in thread ]

  4. identicon
    James Moffitt, 1 Jun 2006 @ 8:38am

    Say do what

    I am a brand new Vonage customer. I am not sure that I like the sounds of this. Does that mean they offered customers a stock but now have retracted the offer or was this just a rumor or huge miscommunication? How is that going to affect me as a customer? I guess if enough folks become angry they will lose some disgruntled customers. If so, where will they take their business with regards to finding something as cheap as Vonage for Voip offerings?

    reply to this | link to this | view in thread ]

  5. identicon
    Topher3105, 1 Jun 2006 @ 9:06am

    Honestly

    And my opinion about Vonage has been noted. Vonage promises a lot, and delivers little. So, if I bought an IPO stock, should I have to pay for it? If Vonage can offer less then expected, I don't think they should complain about stock customers not showing them the money.

    Cheap as Vonage?, I have seen and used cheaper. MOST competitors to Vonage (at least in Canada) offer unlimited plans $10 cheaper per month then Vonage, and offer better features.

    Vonage is just over-hype, period. Its the buzz word that sticks in your head because too many websites like this rave about Vonage this and Vonage that. I bought into this and switch to them expecting cheaper and better service, and I didn't get it. Do yourself a favour and look around, and you will find a dozen competitors to Vonage that do VOIP right.

    reply to this | link to this | view in thread ]

  6. identicon
    James Krawczyk, 1 Jun 2006 @ 9:14am

    Effect on customers

    Vonage sent notices to certain eligible customers that they could get in on the IPO. They used a system where you can bid on a price range, and if the stock was offered within that range, you were obilgated to buy the shares.

    But what has happened is that after the IPO, the share price started falling. Vonage is now telling all those people who bidded on that range to pay up, even though they are basically paying more to Vonage for the stock than it's worth on the market.

    Naturally, those people are upset about having to do that, but regardless of the system used, that's the nature of an IPO. Sometimes really good, sometimes really bad.

    In my opinion, your average Vonage customer shouldn't feel the effects for now. The negative fallout from the situation will almost definitely make lots of the people involved dislike Vonage. It could lead to larger financial problems, which could, in turn, then effect the service (bankruptcy, raised prices, etc.).

    reply to this | link to this | view in thread ]

  7. identicon
    Veteran User, 1 Jun 2006 @ 9:56am

    Vonage Works for me

    Before I switched to Vonage my monthly phone bill was at least $120. Due to the local provider and they way our area was set up I could not even call people across the street from me without incurring long distance charges. Now with Vonage we have two phone numbers and save alot of money a year. Alos, when we travel we take our box with us and plug in at the hotels we are in and continue to receive calls and make them. This enables us to totally bypass the hotel phone charges. Vonage my have messed up on this IPO stuff but the service for us has been flawless.

    reply to this | link to this | view in thread ]

  8. identicon
    eric, 1 Jun 2006 @ 10:05am

    Re: Vonage Works for me

    I haven't kept up, but isn't 911 on boneage still iffy?
    Seems like buying a car cheaper, but with no airbags.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, 1 Jun 2006 @ 10:13am

    The demise of Vonage

    My thoughts on Vonage were also duly noted yesterday - they are fantastic until something goes wrong, then you're completely hosed with no hope of ever getting it fixed.

    Their customer service is FANTASTIC when you're a new customer setting up your service, after they've been billing you for a few months you can forget about ever getting any support at all, and don't even bother asking for a credit from them when your service goes down for a few days and it takes five or six hours on the phone to get the message across to them (cell phone minutes, of course, becasue your phone is dead).

    Bottom line - this company is jacked up top to bottom and doesn't offer a significant enough value proposition to survive. This latest is another example of the character or culture of the company - one day the CEO is on TV and says one thing (which is against SEC regulation, by the way), and then the company reneges days later.

    Someone will buy them for their customer base when they finally die. My money is on AT&T.

    BTW - I recently quit Boneage and got $40 / month flat, long distance included, with all the bells and whisltes including online voicemail checking, email notification, etc. from the new AT&T/SBC Company. It's a few bucks a month more, but I can always get them on the phone within minutes, the service works well every single time, and I've got real 911 service that actually works.

    reply to this | link to this | view in thread ]

  10. identicon
    Bigref, 1 Jun 2006 @ 10:36am

    Re: Capitalism

    NO ONE was forced to buy into the Vonage product or IPO. The company is run by a proven crook. That has been under-reported by the media but is widely known. IPO investors were motivated purely by greed and failed to do even minimal research. That is stupidity and not a necessary component of capitalism - but it helps. It helps socialism even more.

    reply to this | link to this | view in thread ]

  11. identicon
    VPR, 1 Jun 2006 @ 10:46am

    Their customer service is FANTASTIC when you're a new customer setting up your service, after they've been billing you for a few months you can forget about ever getting any support at all, and don't even bother asking for a credit from them when your service goes down for a few days and it takes five or six hours on the phone to get the message across to them (cell phone minutes, of course, becasue your phone is dead).


    I've never had a problem with their customer service. Actually, they have been quite brilliant.

    reply to this | link to this | view in thread ]

  12. identicon
    brad, 1 Jun 2006 @ 11:11am

    I agree with Veteran User

    I have had no trouble with Vonage. I have used their online voicemail checking and email notification with no trouble.

    As for the people who do not want to pay for the stock they AGREED to buy, anyone who is stupid enough to agree to buy stock before it even hits the market gets what they deserve. Most IPO's tank in the first weeks and Vonage is no exception. Just read up on the company and you will see that they have yet to ever turn a profit.

    Of course if we all quit Boneage and signed up for AT&T for $40 a month flat, well here comes the monopoly again and I guarantee that the $40 a month flat will soon start increasing.

    Last thing, program a speed dial number in your phone for your local police department and when you get the recording press "0" and you will be transferred to the attendant. It might take 5-10 seconds more that dialing 911, but for $180 per year savings over the $40 flat AT&T, I will live or die with it.

    reply to this | link to this | view in thread ]

  13. identicon
    SammyJ, 1 Jun 2006 @ 12:00pm

    I did it...

    I admit it, I bought the stock... I have been a Vonage customer for almost a year now and have ZERO complaints. I save about $50-60 every month compared to what my phone bill used to be.

    When I heard about the IPO I wanted in, though I was almost scared off by reading through the prospectus in which Vonage made it very clear that committing to purchase shares was risky. I had to have been forced to read and check off boxes acknowledging I had read in their material (at least three times!) that they were not profitable and were not planning on being profitable anytime in the near future.

    Sure the share's are down $5.36 from where they started and people are saying they do not want to pay...but let's say tomorrow they gain that $5.36 back and then some. Those customers who have not paid yet for the stock allocated to them are going to be quick to want to pay up at $17 (even if its value was $20) because they feel "entitled" to that...so why are they not "entitled" to pay for the loss too??

    The stock market is a risk and those that bought without doing their homework need to realize this is not some game or a "sure thing."

    I am in this for the long haul!

    reply to this | link to this | view in thread ]

  14. identicon
    veteran ebayer, 1 Jun 2006 @ 12:08pm

    deadbeat bidders must pay

    If you bid on an IPO and your bid is accepted, you are obligated to pay regardless of what the market does immediately afterward. All IPOs are a crapshoot.

    reply to this | link to this | view in thread ]

  15. 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.

    reply to this | link to this | view in thread ]

  16. identicon
    SammyJ, 1 Jun 2006 @ 1:20pm

    clarification...I did it...

    Just so we are all clear when I say "I admit it, I bought the stock" I mean I PAID for the stock...$17 per share that was allocated to me.

    reply to this | link to this | view in thread ]

  17. identicon
    anonymous coward, 1 Jun 2006 @ 2:26pm

    anyone who bought VG stock deserves all the pain they get. it's called a "lesson" and it leads to "wisdom".

    shut up, pay up, and make an INTELLIGENT decision next time.

    reply to this | link to this | view in thread ]

  18. identicon
    Mark, 1 Jun 2006 @ 3:31pm

    So, let me understand...people commited to buy stock at a certain price, and after they commited, the price tanked? Doesn't sound too much different than buying stock in, say, a drug company, their vaunted new drug fails to pass muster in the tests, and the stock price drops...three words: tanked after commitment, aka RISK

    reply to this | link to this | view in thread ]

  19. identicon
    Mike Mixer, 1 Jun 2006 @ 7:31pm

    Bonerage

    The biggest mistake I see the company making is drawing joe sixpack into this IPO. It might just be that the price takes off a few weeks from now after
    the unwashed masses sell off at pennies on the dollar
    then the cry will be somebody scammed the thing to work out like that. Leave the prospecting to the old hands with the money to burn. People forget that the only people to get rich in the gold-rushes were the store owners, whorehouse madams,preachers, and the tax collectors, all the miners starved at wages
    or flat gave up.

    reply to this | link to this | view in thread ]

  20. identicon
    Patrick Mullen, 2 Jun 2006 @ 7:44am

    If the people had just read the prospectus they would have seen all of the risks of buying Vonage's stock. It was spelled out for them. The issue with their CEO (now I guess Chairman) the competitive nature of their business, I think it even said that they have never made a profit and wasn't sure that they ever could.

    As for where to go for cheap phone, I think Verizon VoiceWing lowered their price to a couple of pennies below what Vonage offers.

    reply to this | link to this | view in thread ]

  21. identicon
    inge ANDERSON, 9 Jan 2007 @ 12:06pm

    vonage

    I just want peoplle to know that vonage is a scam not only on stock,but also what they are adver. on T.v. PEOPLE DO NOT SIGN ANY PHONE CONTRACTS WITH THEM. THEY TAKE YOUR MONEY OUT OF YOUR ACCOUNT EVEN IF YOUR PHONE SERVICE DOES NOT WORK.AND THEY WANT GIVE IT BACK.MAKES YOU WONDER WERE THIS COMPANY IS COMMING FROM.NONE OF THEM SPEAK ENGLISH VERY WELL.REALLY THINK ABOUT.IT.THEY OWE ME MONEYAND ALOT OF OF OTHER PEOPLE THAT I BEEN IN CONTACT WITH.IF ANYBODY WANTS TO GET A LAW SUIT GOING LET ME KNOW.i THING IT IS TIME AMERICAN PEOPLE SRART WORKING TOGETHER AGAIN. I THING ALOT OF PEOPLE HAVE FORGOTTEN WHAT UNITED STANDS FOR AND THAT IS THE ONLY THING THAT MADE THIS COUNTRY GREAT.IT IS SAD TO SAY THAT OTHER COUNTRIES ARE TAKING OVER. IT IS BAD ENOUGH THAT WE HAVE TO DIAL 1 TO SPEAK ENGLISH IN ARE OWN COUNTRY. I CAME HERE TO LIVE FROM GERMANY,i WAS TOLD TO SPEAK ENGLISH AND THAT IS WHAT I DID.I ALSO TAUGHT MY CHILDREN ENGLISH.GETTING BACK TO VONAGE,DONT SINGN ANYTING.THE SERVICE DOES NOT WORK EVERYWERE EVEN IF THEY TELL YOU OTHERWISE.THANK-YOU FOR JUST READING THIS.

    reply to this | link to this | view in thread ]

  22. identicon
    inge ANDERSON, 9 Jan 2007 @ 12:06pm

    vonage

    I just want peoplle to know that vonage is a scam not only on stock,but also what they are adver. on T.v. PEOPLE DO NOT SIGN ANY PHONE CONTRACTS WITH THEM. THEY TAKE YOUR MONEY OUT OF YOUR ACCOUNT EVEN IF YOUR PHONE SERVICE DOES NOT WORK.AND THEY WANT GIVE IT BACK.MAKES YOU WONDER WERE THIS COMPANY IS COMMING FROM.NONE OF THEM SPEAK ENGLISH VERY WELL.REALLY THINK ABOUT.IT.THEY OWE ME MONEYAND ALOT OF OF OTHER PEOPLE THAT I BEEN IN CONTACT WITH.IF ANYBODY WANTS TO GET A LAW SUIT GOING LET ME KNOW.i THING IT IS TIME AMERICAN PEOPLE SRART WORKING TOGETHER AGAIN. I THING ALOT OF PEOPLE HAVE FORGOTTEN WHAT UNITED STANDS FOR AND THAT IS THE ONLY THING THAT MADE THIS COUNTRY GREAT.IT IS SAD TO SAY THAT OTHER COUNTRIES ARE TAKING OVER. IT IS BAD ENOUGH THAT WE HAVE TO DIAL 1 TO SPEAK ENGLISH IN ARE OWN COUNTRY. I CAME HERE TO LIVE FROM GERMANY,i WAS TOLD TO SPEAK ENGLISH AND THAT IS WHAT I DID.I ALSO TAUGHT MY CHILDREN ENGLISH.GETTING BACK TO VONAGE,DONT SINGN ANYTING.THE SERVICE DOES NOT WORK EVERYWERE EVEN IF THEY TELL YOU OTHERWISE.THANK-YOU FOR JUST READING THIS.

    reply to this | link to this | view in thread ]

  23. identicon
    inge ANDERSON, 9 Jan 2007 @ 12:24pm

    Re: VONAE

    DONT LET ANYBODY TELL YOU TO SHUT UP ABOUT VONAGE THEY PROMISE ALOT BUT DONT DELIVER.THEY ARE NOTHING BUT ANOTHER SCAM COMPANY.THEY WONT GIVE YOU YOUR MONEY BACK.I LOST ALOT OF MONEY BY PAYING FOR A SRVICE I NEVER HAD.Ii AM VERY FRUSTRATED SHOULD HAVE KNOWN IT SOUNDED TO GOOD TO BE TRUE.

    reply to this | link to this | view in thread ]

  24. identicon
    inge ANDERSON, 9 Jan 2007 @ 12:33pm

    Re: The demise of Vonage

    I AM SO GLAD YOU DID. I AM ALSO GOING TO ATT. VONAGE IS A SCAM COMPANY.I LOST MONEY ON PHONE SERVICES I NEVER HAD.I SHOULD HAVE KNOWN BETTER WHEN MOST OF THE PEOPLE THAT WORKED THERE CANT SPEAK ENGLISH VERY WELL.SOMEONE SHOULD CHECK IF THEY PAY THERE PEOPLE MINIMUM WAGES

    reply to this | link to this | view in thread ]

  25. identicon
    inge ANDERSON, 9 Jan 2007 @ 12:44pm

    Re: Vonage Works for me

    YOU MUST BE WORKING FOR VONAGE OR THEY HAVE NOT HAD A CHANCE TO CHEAT YOU OUT OF SOME MONEY YET.I WISH YOU ALL THE BEST OF LUCK. YOU WILL NEED IT.

    reply to this | link to this | view in thread ]


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