VoIP Player Vonage Eyes IPO

VoIP start-up Vonage Holdings Corp. is reportedly planning to file for an initial public offering (IPO) that could fetch as much as $600 million for the company. That is, if investors are willing to drink Citron-flavored Kool-Aid. If history is a guide, they will. Willingly. Over the last three years Vonage has signed up customers buying more than 800,000 VoIP lines, raised $400 million in venture capital and ramped its operations to count 1,500 employees. But this has occurred during the 'low hanging fruit' phase of the VoIP market's development. With cable's VoIP rollout ramping and the Bells following suit, Vonage's free ride is coming to an end. Driven by smash-mouth CEO Jeffrey Citron, Vonage has spent lavishly on marketing as part of a VoIP market land grab. Citron's brash 'we'll bankrupt the Bells chatter is reminiscent of Dave McCourt, the former CEO of RCN, the cable overbuilder now struggling to emerge from bankruptcy. Frankly, the most exciting thing about a Vonage IPO, will be the opportunity to examine the company's financials and watch Citron work to meet Wall Street's numbers each quarter under the full light of day as public company. For everyone that lived through the 'Internet Bubble,' hearing the hype around a Vonage IPO and watching Google trade at $285 a share is like deja vu all over again, as Yogi Berra would say. Google's plan for a secondary $4 billion stock offering while it already has $3 billion in cash on its balance sheet is the icing on the cake. On the heels of its IM launch into IP communications, maybe Google should simplify the equation by just using its inflated stock to buy Vonage directly at an irrational valuation?
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