Vonage has stayed in the news, but they have to be reeling. That has to be one of the roughest places in the industry to work right now. This from ComputerWorld

Vonage: From darling to disaster
VoIP experts weigh in on what went wrong and what's left to do.

July 26, 2006 (Computerworld) -- With a series of high-profile lawsuits, a bungled IPO and a regulatory melee over its e911 efforts, voice over IP pioneer Vonage Holdings Corp. is looking more like a lost cause than a cause celebre, according to industry experts.

"Vonage has had serious problems. It's a shame, they could have done a lot more. They just haven't been able to execute as well as they should have," says William Stofega, research manager for VoIP services at IDC Corp. in Framingham, Mass.

Stofega is not alone in his harsh criticism of the Holmdel, N.J.-based company, which was founded in 2000 and provides fixed monthly fee broadband phone services to more than 1.6 million subscribers. Founder, Chairman and Chief Strategist Jeffrey Citron and his executive team are accused of poor decision-making, which experts believe has led the stock to tumble from its IPO debut in May of around $17 to just below $7 this week.

Stofega may not be alone in his criticism, but the situation is much worse that the line quoted above would indicate.

Vonage's stock is in the tank. Seriously in the tank. From $17 at IPO to less than $7 this week, it's on the fast track to penny stock.

They've had a lawsuit filed alleging IPO "misdeeds." When your shareholders file a suit like that within two weeks of your IPO, you know you've got trouble.

When a company like Verizon alleges patent infringement and files suit, you know you've got trouble. Going out and buying patents to try to fend off problems is a last ditch effort. It could be too little too late.

Then you get linked to spyware/adware promotion. And no matter how much you spend on PR, you just can't blame something like that on your media company. Not when you're trying to promote yourself as a tech-savvy company doing leading edge things. You're in trouble.

Can Vonage pull out? Maybe. I personally think it's unlikely. I think they'd be doing incredibly well to pull the stock back to $9, but I'd be surprised if they can do that within 18 months the way things are going. So if you're an IPO investor and you bought in at $17, with a prospect of maybe creeping back to $9 in 18 months, why are you leaving money there? More importantly, how much longer will you?

If investors win the lawsuit(s) brought against the company, what to they really win? The shares have devalued so badly that all a lawsuit by investor does now is cost them even more. If they win, what? A stock split so they get twice as many shares worth $3.50? There isn't a pretty win situation.

Is there a taker on the horizon? Not likely in my view. Vonage doesn't have anything anyone wants to buy, even at the half price it would take to buy them out of the business right now.

It will be interesting to watch, but Vonage is in a death spiral, slipping inot the abyss. I don't thnk they can claw their way out even if the rip their fingernails out trying. What do you think? Anyone from Vonage care to do a podcast interview and explain your plan to pull out of this nosedive?


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