This week, skeptics all over the Web were throwing red flags at the Vonage IPO, and yesterday's disastrous first day of trading may have proven them right. "Vonage shares sank like a stone," Business
Week said of the Web phone services firm's first day. Trading opened at $17 per share but weak demand saw the stock fall as low as $14.50. "I haven't spoken to any institutional investors who have a
strong [positive] conviction about Vonage over the long term," one analyst told BW. Why's that? Simply because most everyone who follows Internet media believes the price of phone service will
continue to fall in the coming years. So how did it raise $3 billion in its IPO? Two reasons, really: a strong first quarter showing 400,000 new subscribers, and a $1 raise in its monthly price. That
said users won't be willing to pay $26 for Web-based phone service for long--not with Skype around. Like TiVo, Vonage is a one-trick pony, but one that charges AOL prices for something smart users
could practically get for free.
Read the whole story at Business Week »
