I woke up yesterday morning after my big night out in NYC to see this article in the WSJ called Vonage Says Patent Suits Could Lead to Bankruptcy and I was surprised because that's not their normal press releases that look like celebrations. Oh wait, this wasn't a press release, silly me, this was something buried in a SEC filing where you need to be more methodical and realistic because the Government reads it. Did their press releases which is their news to the community at large even mention doom and gloom? Let's take a look at their recent press releases:
- March 23: Vonage Enjoined: Company Expresses Confidence....Mention of bankruptcy? No. However we get this: "We are confident Vonage customers will not experience service interruptions or other changes as a result of this litigation," said Mike Snyder, Vonage's chief executive officer.
- March 26: Vonage Comments on Recent Court Proceedings....Mention of bankruptcy? No. What do we find in that press release? The following upbeat messages...."To paraphrase Mark Twain, the rumors of Vonage's death have been greatly exaggerated," said Mike Snyder, Vonage's chief executive officer. "Friday's events represented one small step in what is sure to be a long legal battle. "The fact is we've been preparing for this verdict and the possibility of an injunction for months," Snyder added. "For the market to react the way it did to the recent rulings shows an unfortunate lack of understanding of the judicial/appellate system, a lack of appreciation of Vonage's resourcefulness, or, perhaps, both. Anyone who's counting Vonage out is making a huge mistake."
- April 6: Vonage Receives Temporary Stay....Mention of bankruptcy? No and pretty much a bland press release.
- April 9:...Vonage Continues to Operate as Usual Mention of bankruptcy? No but you do get this nugget from them: Vonage will continue to provide digital telephone service to existing customers indefinitely by paying into escrow a quarterly royalty of 5.5% throughout the appeals process. Separately, the District Court required Vonage to post a bond of $66 million to secure Verizon's damages judgment. Vonage is pleased that existing customers will not experience any interruption in service. The Company continues to believe it will succeed on appeal and continues to work on designing around the Verizon patents.
Now onto their SEC filing from April 17th that you can find here. I'll have the details of the filings on the post continuations because this post is getting too long, but in summary it talks about massive layoffs, bankruptcy, lack of new customers, failure to maintain a stock price to stay on the NYSE, and other horrible results.
You know why I'm so fed up with this? I've seen my PR and corporate communications co-workers put these together and it takes weeks even to just get final approvals from compliance and legal which means while they were releasing these upbeat releases they were working on this doom and gloom end states for the SEC filing. And, I wonder how much they tell their customers. Did they send out an email or call them? I'm guessing no.
This is just more magic tricks from this joke of a company trying to get as much money out of investors and customers before they go belly up. Shameful and disgusting.
P.S. One more article from the WSJ called With Vonage, It's Risky to Follow the Leaders which talks about their insiders buying and selling Vonage. What's funny is this gem at the end of the article "InsiderScore.com research director Ben Silverman said that while insiders have been active buyers, hedge funds and institutional investors haven't been. "There has not been institutional support for the name," Mr. Silverman said. "It seems pretty rare to me that you see a stock that hated."
Vonage's doom and gloom from their SEC Filing:
in the loss of a substantial number of existing customers or prohibit the
acquisition of new customers;
- lead to an event of default under the terms of our convertible notes, which could accelerate the payment of approximately $253.6 million of principal and interest under our notes;
- cause us to accelerate expenditures to preserve existing revenues;
- cause existing or new vendors to require prepayments or letters of credit;
- cause us to lose access to key distribution channels;
- result in substantial employee layoffs or risk the permanent loss of highly-valued employees;
- materially and adversely affect our brand in the market place and cause a substantial loss of goodwill;
- cause our stock price to decline significantly or otherwise cause us to fail to meet the continued listing requirements of the New York Stock Exchange, which could result in the delisting of our common stock from the Exchange;
- materially and adversely affect our liquidity, including our ability to pay debts and other obligations as they become due; and
- lead to the bankruptcy or liquidation of the company.