Feeds

Vonage floats, then bobs

First day pains

The next step in data security

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. ®

Security for virtualized datacentres

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
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Why Oracle CEO Larry Ellison had to go ... Except he hasn't
Silicon Valley's veteran seadog in piratical Putin impression
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
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
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.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
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?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.