Oy vey Vonage

Posted by: Aaron Pressman on May 24, 2006

Back in April 2000, just as the bubble was popping, AT&T — still a telecom goliath at the time — did an IPO spin-off of its fast-growing but profit-starved wireless arm. There was a fair amount of hype and it seemed like IPOs in those days were solid gold if you got shares at the initial offering price. So lots of people were clamoring to get some and the AT&T decided to let employees in on the expected bounty. But the $10 billion IPO opened up just a couple of bucks and it was practically all downhill from there. Ouch.

Not surprisingly, perhaps, it’s the Vonage deal that had me reminsicing about the mighty days of Ma Bell’s failed grab for IPO glory. Vonage, you’ll recall, has decided to let its customer buy in at the IPO price. Vonage, priced at $17 a share, may be about to open at $50 under the symbol VG, but don’t take the bait. As has been endlessly written (see for example colleague Peter Elstrom’s excellent piece yesterday), there’s not much there there.

Still, I’m watching to see where Vonage, Mastercard and Burger King end up. Despite the stock market’s choke over the past week or two, these deals are still getting priced. No blow outs or blow ups yet, so the results seem somewhat amiguous so far. Last gasp or sign of underlying strength? I’ll be back to you on that one…

UPDATE — Whoops, looks like Vonage owners will get no bounce at all. The shares have opened down 3%, according to Reuters. Can’t say you weren’t warned way before this all started.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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