Feeds

Vonage floats, then bobs

First day pains

Top 5 reasons to deploy VMware with Tegile

Internet phone pioneer Vonage went public today, but received an icy reception. The stock price floated down from its initial price of $17 a share to close at $14.85. That's the worst first-day performance for two years, and customers who took up the company's offer have been burned.

Vonage operates VoIP in the US, Canada and the UK.

While Skype has already cashed in on the VoIP hype, persuading eBay to part with $2bn, Vonage has failed to find a buyer, and looking at the books, it's not hard to see why.

Even the most bullish analysts don't expect Vonage to be profitable until 2008 or 2009. Acquisition costs are over $200 per customer, while the general trend is towards cheap or free calls.

Vonage is already under intense price competition from incumbents like Verizon. The cable giants too are gearing up to add VoIP services to their data plans. And in addition to fixed operators, the mobile companies also want Vonage's minutes, with handset manufacturers adding seamless roaming and VoIP calls to their handsets.

Vonage has raised almost $650m in capital in the past five years, and carries an accumulated debt of $467m. In its prospectus, Vonage said it gained $118.9m revenue in the first three months of 2006, but lost $85.2m. Last year the company posted a loss of over $260m.

Despite an optimistic outlook - Vonage says it wants to raise its 1.6m subscriber base to 15m by the end of next year - it's hard to see who else can afford to promote VoIP, except a deep-pocketed incumbent.

Like so many of the "Web 2.0" start-ups, who are basing a business on a menu option, maybe VoIP was only ever a feature of something else. ®

Beginner's guide to SSL certificates

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple's iPhone 6 first-day sales are MEANINGLESS, mutters analyst
Big weekend queues only represent fruity firm's supply
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Bill Gates, drugs and the internet: Top 10 Larry Ellison quotes
'I certainly never expected to become rich ... this is surreal'
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.