Veritas Research analyst Neeraj Monga has published an extensive and critical report on Vonage after some serious number crunching. Entitled “Not Too Late to Hang Up”, Monga concludes Vonage is a “sell” and its stock is worth less than $5. “Vonage is caught up in the perfect storm,” he said. “Regulatory uncertainty, competitive pressures, lawsuits, unhappy customers and a damaged brand will derail its business plan. Time to hang up.” While the company's supporters point out Vonage could have 4.5-million to 7-million customers by 2009, Monga said growth will come at a cost: $777-million to $1.28-billion of cash burn. If things come in on the high of the range, he thinks Vonage may have to make a debt or equity offering next year.
  Vonage is starting fight back after a post-IPO quiet period that lasted until June 19. In a BusinessWeek story, spokeswoman Brooke Schulz said “we're not toast”, and that people who look at the cash burn are ignorning the fact “we have a healthy business here”. That's a certainly optimistic outlook, which it ignores the fact Vonage is bleedling rink ink and it has no plans to become profitable any time soon as it focuses on subscriber growth. It should also be noted Vonage just hired a new senior v.p. of investor relations, Craig Streem, who will a huge job trying to convince the investment community that the company is headed in the right direction. Vonage shares closed yesterday at $8.85, just above the 52-week low of $8.25. Just in case you forgot, the company did its IPO at $17 a share.

Any bets on what Jeff Citron will talk about today during his keynote speech at the Canadian Telecom Summit in Toronto? Will he make a mea culpa given Vonage shares have tumbled 25% since the IPO last month? Or will he make a “the world is still great, Vonage is still great, VoIP is still great,” sales pitch/speech? Apparently, Vonage still has another week before he can reallly start to talk openly again so expect Citron to be in sales-mode today. Still, it would be interesting to find his take on why the stock has performed so badly and whether its performance will have any impact on the company's ability attract new customers. By the way, Citron's stake in Vonage is still worth about $500-million, which gives him a six-fold return on his original investment. At the very least, you have to give him credit for hitting another entrepreneurial jackpot. His earlier successes include Island ECN, which was sold to the Instinet Group for $503-million, and Datek, which became one of the largest online brokerage houses before it was acquired by Ameritrade for $1.3-billion. The guy has a knack for recognizing opportunities where technology is going to have a disruptive affect.
Update: Citron's keynote lasted all of 15 minutes and didn't feature a Q&A as the quiet period lasts until June 19. It was 900 seconds little glitz or substance. Perhaps the only thing of interest was a new USB fob that turns any computer into a Vonage phone.