Forum Moderators: open
Here it is :
[today.reuters.com...]
Could be big...
Does anyone else think so?
Could be big...
Does anyone else think so?
No, I don't. I think they missed the boat in a big way.
The full company valuation (Vonage's ARPU fell at a CAGR of 20% between Q3 2003 and Q3 2005) and with customer churn of between 2% and 3%, is barely more than investment to date. The VC's will be seriously gutted about it, and may well end up losing money. I'm sure that the reason for this IPO is simply because the current investors have refused to continue writing out cheques. So why would the public? It's a company losing on average $117m a month. Where's the ROI?
If you're "generous" with valuation, it comes out at about $1.2bn, but losses are mounting incredibly fast and with the prospect of greater, rather than less, competition.
So a company in trouble in my opinion and lacking in any kind of infrastructure to pull it through. I just don't see the public investing in it - customer "churn" is far too high, and when you have customer aquisition costs of around $250 a head, churn is a big enemy.
The big players in this space will be the encumbent network owners (telco's and cable TV companies) that are able to bundle voice services with network access and/or TV services, the so called "triple-play" model.
Services like Skype have changed peoples perception to voice services such that VoIP is perceived as a "free" commodity. No-one wants to pay money for it.
Those that can therefore "bundle" it with other services are the only ones that can afford to carry it.
TJ
