I was looking through my posts the other day because I had quite a few visitors read through the best posts tab at the top and I thought, hmmmm I haven't written a What The Vonage Post in a while. And those my friends, are some of your favorites. Anyway, I'm obviously up very late due to a late dinner and I was reading through my RSS Feeds and saw this article from Business Week called What the Verizon Verdict Means for Vonage. And of course this just made me sick....
Its not bad enough that their phone quality and customer service suck, or that their former marketing plans were wasteful and untargeted or that they screwed their own customers in investing in a worthless company, now they lost a patent infringement lawsuit versus Verizon and have another one pending with Sprint. This my friends is a poorly run company and why you MUST READ THE PROSPECTUS before you invest in an IPO. I'll explain why later.
According to the BW article, What The Vonage must pay $58 million dollars in damages plus a whopping 5.5% per subscriber per month. On top of that an injunction will most likely be handed down and if that doesn't scare its customers off, I'm not sure what will. Of course this piece of ripped paper for a stock will appeal and most likely look for some company to buy out their remaining suckers err I mean subscribers and put this mistake where it belongs - in the IPO trash heap of all time. According to the article this ruling will add $1.6 per line per month in costs which will further push its numbers in the tank.
Now one lesson for all you wanna be IPO investors is to read the prospectus. If you would have, you would have noticed this paragraph at the top of pager 15..
We may be subject to damaging and disruptive intellectual property litigation.
We have been named as a defendant in three suits currently pending that relate to alleged patent infringement. See "Business—Legal Proceedings—Patent Litigation." In addition, we have been subject to other infringement claims in the past and may be subject to infringement claims in the future......
Parties making claims of infringement may be able to obtain injunctive or other equitable relief that could effectively block our ability to provide our services and could cause us to pay substantial damages. In the event of a successful claim of infringement, we may need to obtain one or more licenses from third parties, which may not be available at a reasonable cost, if at all.
Seriously this was bad news from the start and I mean right from the very start. A co-worker of mine at Harrisdirect once said to me back in 2004 that I should look into working at Vonage. I told her, no way, that company is all about price and provides no real value. Of course I was wrong on part of that. It did provide value to the original owners who made a killing on the IPO while you investors got stuck buying a piece of paper that wasn't worth using to wipe down your dirty windshield.