Burning money like no tomorrow

February 9, 2006

1 Min Read
Vonage: More Fuel Please!

3:00 PM -- Wall Street has been saying that in the new IPO market, you need profitability to sell shares to the public.

Vonage Holdings Corp. (NYSE: VG), which filed for IPO this week, plans to test that concept in the extreme. (See Vonage Files for $250M IPO and High Flyin' Vonage.)

I started reading the Vonage S-1 filing but got stuck on the first "Risk Factor":

  • We have incurred losses since our inception, and we expect to continue to incur losses in the future. For the period from our inception through September 30, 2005, our cumulative net loss was $310.0 million. Our quarterly net losses generally have increased each quarter from our inception through the quarter ended September 30, 2005, for which our net loss was $66.0 million. Initially, our net losses were driven principally by start-up costs and the costs of developing our technology. More recently, our net losses have been driven principally by marketing expense, which was $176.3 million for the first nine months of 2005.

Not only is Vonage losing money, but its losses have been increasing. Hmm. Makes you wonder how this company is going to go public in the new "conservative" IPO market.

— R. Scott Raynovich, Editor in Chief, Light Reading

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