I hate to beat a dead horse but James Enck has an insightful post that complements Om Malik's reading of Vonage's S-1 (beware the churn, beware the churn!). James, who covers the European telecom sector for Daiwa Securities, crunches the numbers and figures Vonage is probably worth about $1-billion. Given Vonage founder/chairman Jeff Citron owns a 41% stake and the company has raised $408-million of private equity, how much of the Vonage do the VCs own if Vonage is apparently worth $1-billion? And how much equity does Vonage have to give away if it wants to raise as much as $250-million? Somehow, the numbers don't sense unless Vonage investors (Citron, Bain Capital, New Enterprise Associates, Meritech) are willing to do a down round to complete the IPO. If this is really happening, they must really want some liquidity and/or hope the stock will rally once it starts trading. Maybe Enck's assumptions and my rudimentary math are off but there's something that doesn't jibe about this IPO. What I want to know is who's going to invest in the Vonage IPO? Is it retail investors who think the brand is valuable and are willing to ignore the fact the company is bleeding as it spends heavily on marketing to attract subscribers? Or is it institutional investors who feel obligated to invest because they've made money in other deals done by Citron and/or the underwriters? As James concludes, the timing of this offering is strange because market conditions are volatile and there seems to be little demand for tech IPOs. Call it hunch or simply skepticism but the more I think about this IPO, the more I think it could get pulled or scaled back even more from the $600-million original estimate.
Update: Here's The Street.com's take on the Vonage IPO.

In Canada's wireless landscape, Telus and Rogers are cool while Bell Mobility is not. This distinction has made hammered home in recent weeks by a series of bad, but memorable, television and billboard ads for Bell created by Cossette. The billboard ads feature cartoon animals trying to play Olympic sports with the tag line "Bring on the Real Athletes". The TV are two-pronged: one campaign features cheesey, pixellated characters such as this one, which has prompted a lawsuit from Rogers, while another has two beavers, Fred and Gordon - auditioning to be spokesmen/spokesbeavers, which are far too close to the animal-themes used for years by Telus. I'm not sure what Bell is trying to achieve but if it's attention for bad advertising, it's working. Bell's fundamental problem is it's "Your Father's Wireless Service" because it has this stodgy businessman cache. This is great if you're looking to sell Blackberrys to senior executives and the proconsumer, but not so good if you're aggressively pursuing the high-growth youth market that see their wireless phones as an extension of their lifestyles. Telus and Rogers have been successful in developing brands that resonate with young consumers, while Bell simply isn't there and won't be with this advertising campaign unless it's plays into the "so bad, it's good" school. (It is difficult to tell how well or badly Virgin Mobile is doing because they don't release sub numbers). I'm no advertising expert but if Bell wants to score with young consumers, it needs to reload.