Ahh, back to one of my favorite subjects, Vonage. Sorry I didn't post this sooner, but besides being in meetings on Friday, I had family obligations all weekend long.
On Friday Federal Judge Claude Hilton agreed with Verizon that Vonage shouldn't be allowed to use Verizon's VOIP technologies, but gave them two weeks to come up with a work around and/or come up with a reason to stay the execution, err I mean injunction. Of course, this probably won't kill Vonage, but perhaps their looming suit with Sprint might. This ruling sent the stock down to $3, but as of Monday showed a little bounce. I guess traders figured this wasn't the death blow, yet or was convinced by this Vonage press release.
Yes, a Vonage press release which should only be read when you had a few cocktails or when you are so depressed that you need someone else's misery to brighten your outlook. The title is classic which is solely aimed at the traders to boost the stock price while people in the company cash out. " Vonage Comments on Recent Court Proceedings, Outlook for Appeal and Market Overreaction" with a subtitle that the company is confident in their appeal. Nice, a press release solely directed at traders to boost their stock price and to brag how they knew this was coming and prepared accordingly. Yes - just like the Titanic prepared to hit an iceberg.
And, just in case you missed it - according to the press release "Vonage's accomplishments continue to validate its business model and strategy. The company has achieved 19 consecutive quarters of double digit revenue growth, doubled revenues to $607 million in 2006 alone, and added nearly 1 million net subscribers last year." Wow, that's great, right and of course all of those other people that have been dumping this worthless piece of stock are crazy right? Yes, well they neglected to tell you that their brilliant strategy lost $266 million last year.
Oh and that customer count they bragged about? Well, their churn was still high for 4Q last year, but it was slightly better because these geniuses decided to leave more people on their service by increasing the grace period for non-payment. "As part of our effort to improve customer satisfaction and increase retention, we extended our customer grace period for non-payment in order to better resolve customer accounts that may be past due. This increase had a one-time positive impact of 10 basis points on our average monthly customer churn for the fourth quarter." Or how about (via the same financial release) that their average cost per sale was $249 for the year, $306 for the 4Q all while lowering marketing costs. I've said this before, optimizing a marketing campaign should never result in a raising of CPA unless of course you are completely clueless.
Ahh the Vonage press release. Why issue this? Who knows but the one thing Vonage has been successful at was getting uninformed investors to buy into this worthless company from day one and why stop now? Please tell me you have some master plan for recovering any money from this or that you somehow bought at $3 and are waiting for a big day in the market to make your 10% back or so. One of the many Jim Cramer sayings that I've always remembered is "Bulls make money, bears make money, but pigs get slaughtered." Here's hoping you have a plan, little piggie ;-)