Another Twist to the Failed Vonage Deal

Now we are hearing that Vonage customers who took the company up on its offer of IPO shares at $17 each are planning on backing out and not paying after the stock cratered upon issuance. Vonage’s response? They’ll reimburse their underwriters for any shares not paid for by their customers. Wait, what?

I don’t care how desperate you are to keep your customers happy. If they refuse to pay for their stock, you go after them. Now I have not seen the agreement that went along with the IPO offer. I am simply assuming that they had to sign something that bound them to purchase shares. If there is indeed some sort of contract, how can you simply say, “you know what, you were stupid for thinking $17 was a fair price for our stock, so don’t worry about paying us.”

When are individuals going to take responsibility for their actions? Rather than pay consequences for bad decisions (like paying $17 for Vonage), Americans now blame others first, opt for lawsuits, or in this case they simply try and stop payments on their checks. I don’t know what’s worse, Vonage pricing their IPO so ridiculously high, or allowing (and supporting) their customers to act in such an irresponsible way. Either way, I wonder if there are any shares out there to short yet.

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4 Thoughts on “Another Twist to the Failed Vonage Deal

  1. Andy Kern on June 1, 2006 at 5:46 AM said:

    I wonder if Vonage would actually be better off losing those customers and keeping the cash the customers promised to pay for their shares. That is, I can envision a scenario in which the $1700 the customer pays for a round lot might exceed what they might othewise pay the company for service over their lifetime.

  2. Scott on June 1, 2006 at 8:30 AM said:

    Sorry, meant to add some text there. Looks like Vonage will force customers to buy the IPO. I’m with you, Chad, time to get on the dark side of this one.

  3. Chad Brand on June 1, 2006 at 8:35 AM said:

    Yeah, they clarified their comments since it fueled much speculation. Still, saying they will repay the investment banks for any losses is ridiculous. If customers don’t pay, Citi and Goldman should just sue them directly. It’s not Vonage’s responsibility to pay off their bankers just because they feel bad about how the IPO went.

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