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« WSJ: Acme Jetpack Market | Main | Weekly Standard: Give Me Bandwidth...No one to root for in the net neutrality debate. »

May 24, 2006

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Comments

Bill Burnham

Still, gotta hand it to Citi for getting the deal done in this tape and in the face of some serious negative publicity, not to mention your sucker punch. One can only hope the syndicate desk was smart enough to be short 100% of the shoe out of the gates and smart enough again to stand back and let it trade down to $15 before mopping up. I wouldn't want to be taking calls from PMs on that desk though...

Jason Wood

Andy,

It was an excellent call and, hype aside, obviously you weren't alone in your analysis. The interesting aspect of this deal is that shorts aren't in the name yet, at least not in volume. There was virtually no stock to borrow today (I know, I tried).

Jason

anskil

Can Citi really be short their own deal before it trades? Wouldn't somebody have to own the shares before it could be shorted?

George Chuang

"13.5% of the deal was reserved for Vonage customers, the poor schnooks".

That must be a record in allocation. That book must have been so weak. Wow. I guess Citi is propping it up at 13. I wonder how long that will last.

Excellent call. I can't believe that Vonage would resort to socking their loyal but not necessarily market savvy customers with this loss. It is sure to have some repercussions.

As for the sales desk answering calls. Hey, that's what juniors are for right? :) I guess they will make it up with Yankee tickets....

Jan Henneli

Never trust a broker !!!

Michael Urlocker

Andy: I always appreciate your candid comments and you were on the money about the sucker-punch. Skype clearly threatens the value of the Vonage VoIP offer because 90%+ of Skype customers pay zero per month.

But here's a derivative question: If we look at either of Vonage or Skype, do these companies serve as good role models for other would-be market disruptors?

Telcos live in fear of cheap VoIP, so there is something there. And the companies have a new business model (no legacy network) which is good.

So we ran Skype and Vonage through our Disruption Scorecard and they both seem to have pretty big deficiencies, with Vonage earning a 'C' and Skype earning a 'B'.

Key issues for Vonage:
Vonage is not creating a new market;
Vonage is not demonstrating and standing on unique attributes;
Business model looks like a dotcom: high growth now, worry about profit later.

As a former Wall Streeter, I'd be curious what you think of the Disruption Scorecard we put together as a quick-check kind of tool.

Can be downloaded at www.OnDisruption.com


Mike

thelittleendian

All I would say is Skype found a sucker in eBay - they stuck 2.6 B to them. Vonage found their own suckers in their customers, underwriters, employees and anybody els e who reached for their wallet. In the socio-economic realm, one happens to be more morally/ethically tolerable than the other.

Whats eBay making by giving Skype calls for free? Whats the monetary effect of adding Skype to eBay's trading platform - where is the ROI? One could say Skype is eBay's turret and the eBay's ROI is long term. One could also say, Vonage is mom-n-pop's family/SB PBX/Fax machine and their ROI lies in cash-flow. Multiply mom-n-pop by a couple million and rising and you have a long term number to chase.

Big difference - you short eBay not Skype, so Skype doesnt get the blame. You have nothing else to short but Vonage - and Vonage gets the blame. Its all fair game.

maplestory mesos

All I would say is Skype found a sucker in eBay - they stuck 2.6 B to them. Vonage found their own suckers in their customers, underwriters, employees and anybody els e who reached for their wallet. In the socio-economic realm, one happens to be more morally/ethically tolerable than the other. ..

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