Vonage IPO: There's A Sucker Born Every Minute

Vonage's IPO went off as planned today, and even though shares have been plummeting, the fact that it raised over a half billion dollars shows that in the stock market, there's always a sucker waiting to be had. Vonage is a company with no long-term business plan or prospects. It faces competitors ranging from Skype to AOL, Comcast, Google, every telco in existence, and plenty of smart startups.

The cost of VoIP will drop to practically zero. That's fine for companies like Google and telcos, who will use free VoIP as a loss leader to get people to sign up for higher value services --- TV for the telcos, for example.

But for Vonage, which sells only VoIP access, what else is there to be sold?

By March, Vonage's deficit had reached $455 million. There's no end of red ink in sight.

Tom Taulli, an IPO analyst and author of "Investing in IPOs," summed up Vonage's IPO to Reuters this way: "It's a wildly unprofitable company still selling at a very high valuation."So who would buy? PT Barnum had the answer: "There's a sucker born every minute."