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Vonage is cutting its customers in on its initial public offering.
In an e-mail, the VOIP (voice over IP) provider detailed a plan to allow its customers direct access to shares of its IPO offering, currently expected to price between $16 and $18.
“Because much of our success is attributable to our customers, we have asked the underwriters of the IPO to reserve shares of common stock for sale to certain Vonage customers at the IPO price in a Directed Share Program,” the company said in an e-mail.
To participate, potential investors need to have been a Vonage customer from Dec. 15, 2005, through Feb. 1, 2006. Customers dont have to remain with Vonage to participate in the IPO.
The big question is whether customers will want to participate. Vonage, which had 1.6 million subscriber lines as of April 1, had a net loss of $85 million on revenue of $119 million for the quarter ending March 31. For 2005, Vonage lost $261 million on revenue of $269 million. Vonage competes with everyone from Verizon and AT&T to Skype.
The company also has a relatively new CEO. Michael Snyder, formerly president of ADT Security Services, took over for Jeffrey Citron, the companys founder and largest shareholder, Feb. 27. Citron remains with the company as chief strategist.
To participate in the IPO, customers have to check off Vonages risk factors outlined in Securities and Exchange Commission filings. Some of the risks Vonage highlights:
- “An investment in Vonages common stock is considered highly speculative and aggressively risky. You could lose all the money you invest in Vonage common stock.”
- “Vonage has had increasing losses since its inception and expects to continue to incur losses in the future.”
- “Vonage operates in a highly competitive industry and competes with many companies that are bigger and financially stronger than it is.”