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Thursday, 27 September 2007 |
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VoIPsters suffer another setback. Time to buy? Caveat emptor.
Vonage, the VoIP evangelist, is showing a distinct mk.2 dot.com profile just now. The graph showing its customer acquisitions goes relentlessly upwards; its share price, following last year’s high-profile IPO, goes just as relentlessly in the opposite direction. The latest patent infringement decision, involving Sprint, sees Vonage liable for more than US$65mn in penalties.
It’s the latest in a series of decisions that makes the ethical judgement of the company look as dodgy as its call quality. Mind you, it gained some sort of temporary relief on a similar case involving IPR and Verizon (click here for original details) just as the Sprint judgement was being handed down. A small victory in what the company seemingly accepts will be an endless series of court appearances.
"We are disappointed that the jury did not recognize that our technology differs from that of Sprint's patents," said Sharon O'Leary, chief legal officer for Vonage. "Our top priority is to provide high-quality, reliable digital phone service to our customers. Vonage has already demonstrated that it can keep its focus on customers and on its core business while managing ongoing litigation," she added.
It’s in the last few words of that statement that the awful truth resides. Keeping a focus on customers while managing ongoing litigation. Now there’s a mission statement.
Shares in Vonage, which traded above US$13 apiece following the May 2006 IPO, are now priced at under a dollar apiece. Scope for a buyout, sure… but a buyout of what, exactly? With a market cap of just US$150mn, Vonage is now worth little more than the sort of money that new age telco execs take with them to the toilet to tip the guy who washes their hands after they do their business.
This apparent absurdity almost guarantees that News Corp, Yahoo!, Google or Microsoft will be circling Vonage now. File this under ‘we told you so’ and ‘what have they got to lose?’ but ask yourself, ‘what have they got to gain?'.
Jim Chalmers
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