For obvious reasons, I have been preoccupied, but I wanted to take a moment to point out the Vonage story in the New York Times, which despite being well intentioned fails to ask the tough questions, and falls back on rather tame and self serving comments from analysts. Lets break it down….
1. Vonage now has two million customers, which is great, except that Time Warner, Cablevision and Cox are getting there, and Comcast has just gotten started.
2. Those two million customers came after Vonage spent over half a billion dollars. It will need three million more to be profitable. As NYT itself notes, the company loses “2.3 percent of its customers each month.”
3. Qaisar Hasan of Buckingham Research raised his rating to hold but his price target is still $6 a share. In other words, if you took his advise, bought some shares and held them for a while as he suggests, you be out of $3 a share. “This company could be belly-up in three years’ time or be very successful,” he tells the Times. Grrrr! [By the way, in an online poll following Vonage’s IPO, nearly 29% of 755 voters said the stock is going below $5 a share. 33% had predicted it would sink below $10. ]
4. Price war rages, and spend-and-pray competitors are still nipping at Vonage’s heels.
5. The V-Phone…. how about using this device that costs $5 less and still does more including making free phone calls.