Hey, what’s going on folks? Another 250 million for Vonage in private equity, so what about its IPO promises? Ok, we shall discuss that just in a while; let’s look at the Vonage chest now. So, how much does it has? $658 million already raised, still no IPO, so what is this story insinuating?



Ah ha! A few hours back, yours truly had an hour long discussion with good mate Ankit. At the end I thought an hour was too much to actually discuss Vonage in a 24-hr day. Though, it was quite obvious to us what Vonage’s intentions were, we thought of a few more possibilities. Well, I dunno how it might sound, but we did think of how Yahoo! took advantage of its high market value and bought up small companies before the dot com bomb. Now as it stands, Yahoo! is one of the best success stories of the dot com era and has grown stronger ever since.



So is Vonage doing the same thing? 11000 + VoIP players in the market, nothing much to write home about on margins, break even seems to be beyond any visual horizon, when talking about payback period seems like sheer stupidity, Vonage can indeed think along the lines of Yahoo! and 658 million dollars in cash; not bad, not bad.



The IP telephony bubble is going to bust sooner than one can imagine. Only those with deep pockets and diverse businesses will be able to survive and continue with VoIP and then eventually think of turning their VoIP concerns into viable entities. Google, MSN, Yahoo!; all would be there. So, the reason why we thought Vonage is stacking cash to buy smaller players and consolidate their market share in the VoIP bazaar.



But then what is the market value of Vonage? The $2 billion song, that some are singing on the value of Vonage is utter nonsense. I fully agree with Om Malik on this. Tell you what; the analysts who are evaluating Vonage to be a 2-billion-dollar worth company, are either lying or their analysis results are rigged. No, they are not morons - the third possibility. At the most it can be worth just around half the number, but that too after conceding to some arguments that I won’t raise here.



Ok, now what is the real game plan then? What is the plot?



The possibility of Vonage stacking up cash to buy other companies, though may still be a possibility, will not happen. However, if it did, it could have been a very good move before opening its IPO. But for that, it will have to be patient, patient till the bubble bursts; and that we don’t know yet though we feel it happening anytime soon.



My intuition says that the Vonage IPO is not going to come any soon. As Mark Evans wrote in his blog, Vonage is busy improving the books to find a buyer or if it does an IPO as promised in last few rounds. The fact is, if Vonage goes to the market with its shares, the ‘bomb’ might kill it completely.



So what then? It is trying to find a profitable exit. The signs are all there, it is finding a buyer. Didn’t we all know it? *wink*



I would like your views on this.