Archive for May, 2006
Wednesday, May 31st, 2006 | Posted in Vonage | No Comments »
Seems like some customers are complaining since the stock tanked on it’s first day after the Vonage IPO. One must wonder if they’d be complaining that they didn’t want any shares after the fact if the stock had gone up:
Vonage Holdings Inc. hoped to show its Internet telephone customers how much it valued them by making many eligible to buy shares in the company’s public offering last week. The idea backfired: Customers who lined up to buy those first public shares got burned, as the price of the stock has fallen 26 percent.
Now many are outraged, not only by the stock’s poor performance but also by what they say were glitches in Vonage’s unusual effort to include customers in its IPO.
Nina Shreiber, a talent manager in New York, was described in an article on TheStreet.com yesterday as trying to place an order for 5,000 shares but was told she qualified for none — until shares started trading and she was told she owned 1,300, which she says she doesn’t intend to pay for.
"I’m confident in my claim that I don’t have any," Shreiber said in an interview. She added that she had no plans to cancel her Vonage phone service, but other customers on the company’s online chat board were threatening yesterday to do just that. The stock they agreed to buy at an initial offering of $17 a share closed trading yesterday at $12.50.
Vonage officials declined to comment yesterday on frustrated investors not wanting to lay claim to ownership in the stock, citing a 25-day silent period. But in its S-1 filing with the Securities and Exchange Commission, Vonage said it would reimburse its underwriters for any customers who bailed out on paying for stock.
"We have agreed to indemnify the underwriters against certain liabilities, including those that may be caused by the failure of Directed Share Program participants to pay for and accept delivery of the common stock which had been allocated to them," the company said in its filing.
Wednesday, May 24th, 2006 | Posted in Vonage | 2 Comments »
The verdict is in on the Vonage IPO:
Consumers and technologists may love Internet phone service, but investors are having second thoughts.
Today, in its first day of trading, shares in Vonage, the country’s leading Internet phone provider, fell nearly 13 percent below its initial offering price.
The sour reception suggested that investors had doubts about whether the company, which has 1.6 million subscribers, could survive in a market where big cable providers like Comcast and Cox are rushing to offer their own competing services.
At $17 per share, the initial price of Vonage’s offering "did not take into account the fundamental risks associated with the competitiveness of the telecommunications landscape," said Richard Greenfield, an analyst with Pali Research.
Vonage’s shares, which are listed on the New York Stock Exchange, plunged $2.15, or 12.65 percent, to close at $14.85. The stock traded higher at the start of trade, then fell to as low as $14.49 before recovering slightly.
Vonage now has a market capitalization of $2.3 billion.
The company sold 31.3 million shares, or 20 percent of its stock, to raise $531.3 million, money it expects to use to attract new customers. Vonage made 15 percent of its new shares available to its customers; a person familiar with the offering said demand for those shares was three times stronger than supply.
Speculation that the Vonage IPO is oversubscribed:
Wednesday’s initial public offering from Vonage is multiple times oversubscribed, theflyonthewall.com said Monday. The Web site said it expects the IPO to price at the $17-$18 level. The Internet phone specialist will price the offer of 31.25 million shares Tuesday night.
Some are saying that the Vonage IPO is oversubscribed; others are saying that there’s no interest. Should be interesting to see what happens.
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The long-awaited release of Phil Zimmermann’s, the creator of PGP, Windows version of Zfone, the VoIP encryption software has finally arrived. The Mac version was out last month.
The bottom line: fast setup, easy to use.
Background
Zfone uses a new VoIP encryption protocol called ZRTP to secure Internet telephone calls. The protocol provides a high level of security because it doesn’t rely on public key infrastructure (PKI), key certification, trust models or certificate authorities. ZRTP does the key agreement process on a peer-to-peer basis, using a new key for each telephone call. It also provides defenses against "man-in-the-middle" attacks. It also provides other layers of security, which are described in further detail on Zimmermann’s Web site, linked to above.
Review, Plus How to Get Started With Zfone
The new Zfone client for Windows was surprisingly easy to use. First, install a compatible VoIP client. We used the Gizmo client available from the free VoIP service SIPphone. Next, download and install Zfone. These two steps take about 5 – 10 minutes, including download times and the time it takes to set up a free account with SIPphone.
One thing you must do is configure your Gizmo client to use SIP port number 5060 in the "advanced" part of the Options function. Also, be sure to run Zfone before starting Gizmo.
Next all you have to do is contact your friend or associate on his SIPphone account. Unfortunately, you can’t call a landline using Zfone. Your contact must also be running Zfone on his side.
When the call is started it shows up in the Zfone window. Simply click "secure" and Zfone does the rest. It displays a string of characters for you to verify against the string that friend sees on his end. If the two are the same, then you’ve got a secure call.
With a setup time of less than 10 minutes and no glitches, Zfone worked out great. It provides strong VoIP encryption and is easy enough for even non-tech literate people to use.
Give it a try and report your comments back here. Zfone has not been extensively tested with Vonage, so Vonage Zfone testers, we’re particularly interested in your experiences.
Skype users: note that Zfone does not work with Skype (Skype has its own, arguably insecure, encryption).
Phil Zimmermann, upsetting the government again:
Now he is again inviting government scrutiny. On Sunday, he released a free Windows software program, Zfone, that encrypts a computer-to-computer voice conversation so both parties can be confident that no one is listening in. It became available earlier this year to Macintosh and Linux users of the system known as voice-over-Internet protocol, or VoIP.
What sets Zfone apart from comparable systems is that it does not require a web of computers to hold the keys, or long numbers, used in most encryption schemes. Instead, it performs the key exchange inside the digital voice channel while the call is being set up, so no third party has the keys.
Zfone’s introduction comes as reports continue to emerge about the government’s electronic surveillance efforts. A lawsuit by the Electronic Frontier Foundation, a privacy rights group, contends that AT&T has given the National Security Agency real-time access to Internet communications.
In the wake of 9/11, there were calls for the government to institute new barriers to cryptography, to avoid its use in communications by enemies of the United States. Easily accessible cryptography for Internet calling may intensify that debate.
"I’m afraid it will put front and center an issue that had been resolved in the individual’s favor in the 1990’s," said James X. Dempsey, policy director for the Center for Democracy and Technology, a Washington-based public policy group.
The Federal Communications Commission has begun adopting regulations that would force Internet service providers and VoIP companies to adopt the technology that permits law enforcement officials to monitor conventional telephone calls. But for now, at least, F.C.C. regulation exempts programs that operate directly between computers, not through a hub.
"From the F.C.C.’s perspective you can’t regulate point-to-point communications, which I think will let Phil off the hook," said Marc Rotenberg, director of the Electronic Privacy Information Center, an advocacy group in Washington.
Zfone may face more of a challenge in Europe, where the British government is preparing to give the police the legal authority to compel both organizations and individuals to disclose encryption keys.
The announcement of the upcoming Vonage IPO has been creating quite a stir across the Internet, with a flurry of articles and posts. ZDNet’s Russell Shaw is having a field day:
Vonage’s IPO e-mail and phone pitch the wrong strategy:
Although the Directed Share Program is perfectly legit, and Vonage has every right to keep its customers informed about the opportunity, I think the email and voice mail contacts send the wrong message.
Here are my four problems with the Vonage DSP and the way they are communicating its availability:
It sounds like a bail-us-out beg. Vonage may want the offering to sound like a magnanimous gesture of appreciation to its customers for getting the company to the place where an IPO is possible. Yet to me, the DSP sounds a lot like an effort from a company whose underwriters are not confident they can raise the amount of capital they need thru standard IPO avenues. Going to your customers devalues this IPO of the mystique the more successful IPOs have managed to capitalize on over the years.
The emails remind me of penny stock pitches. I get these in my Inbox every day, and so do you. While Vonage’s offer is unquestionably legitimate- which not every single penny stock offer is- hundreds of penny stock spam emals over the years have conditioned me to look askance at that type of marketing. (See the rest)
Skype’s free calling an IPO Killer?
Yes, F(Financially, wink wink)-ing brilliant, indeed.
Former hedge fund manager Andy Kessler thinks that Skype’s introduction of free calling within the U.S. is an effort to "toy with the mouse" before you kill it.
And writing on GigaOm, Kessler thinks the mouse is Vonage.
"The buzz on the Street is that the Vonage IPO is on the rocks. They HAVE to raise money or they are in a world of hurt," Kessler writes. "Their investors don’t want to put another penny in and the company seems to still be bleeding cash, $75 million in the first quarter of 2006. Geez, Vonage is begging customers to buy 20% of the deal – not a great sign.
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In a previous article we discussed the benefits of a hotel VoIP solution for guests. Here, we talk about the benefits to hotels themselves.
A converged IP network, including IP phones, can decreases hotel infrastructure and operations costs, while improving guest servicing:
Decrease Telephony Costs: VoIP service can significantly reduce your hotel’s telephony costs versus traditional circuit-switched networks. In some cases the savings may be 40% or more. Fixed costs will likely be lower, such as monthly service fees, but significant savings on variable usage costs mean lower costs for hotel operations and higher profit margins on guests’ outgoing calls.
Innovative Servicing: A full IP network solution can improve your hotel’s guest servicing. Hotel staff and management can be equipped with wireless VoIP phones which will also give them access to e-mail, text messaging, or PDAs which have the full functionality of front-desk or back office computers. This will allow your staff to respond to guest requests wherever your team members are, not just when they are at their desks.
For example, at some hotels guest requests, whether made electronically over the in-room IP phone or by a voice call, come into a central service center. Operators in the center can then electronically forward requests to the appropriate staff members, who then must acknowledge receipt of the request. The system keeps the request active until another message indicating that it has been fulfilled has been received, thus significantly decreasing the likelihood of guest requests being forgotten.
Convergence: An IP phone and IP network in your hotel can be integrated with all aspects of hotel operations to increase productivity and decrease costs. The network can converge the phone system, e-mail, property management (HVAC, lighting, security, surveillance, etc.) and guest relations and servicing.
Reduced Costs: Converged IP networks decrease infrastructure costs and increase staff productivity, improving the bottom line.
Article on wireless VoIP phones:
You use your handheld wireless cell-phone to talk to your colleagues via a cellular network. So why not use a handheld wireless IP phone to connect to VoIP service providers?
Linksys this week introduced a pair of handsets that do precisely that. On the outside, they look like typical handheld cellphones; but instead of connecting to cellular networks they instead feature built-in 802.11b/g compatibility allowing you to link up with your local wireless router or access point and use VoIP calling services over the Internet (you’ll need to purchase/provide the VoIP service separately, however). With the pricier of the initial two entries you can connect not only in your home or office environment, but you can also connect to your VoIP provider and make calls from public hot spots, as well. Oh, and when you feel the surfing urge, the pricier version also includes an embedded Web browser and can receive and view live video feeds.
No surprise here:
In a few years, incumbent telecom operators will no longer earn most of their revenues from traditional Public Switched Telephone Network voice service, according to a study released Tuesday by U.K. market research firm Informa Telecoms & Media.
The precipitous drop in PSTN revenue will be caused by increasing use of voice-over-IP (VoIP), a trend the telecoms will need to continue to capitalize on, the study says. The study predicts a worldwide decrease in revenues from traditional PSTN voice service of about 16.7 percent between the end of 2005 and 2011. That percentage works out to about $100 billion in lost earnings from traditional voice service, the market research firm said.
The market research firm company said that VoIP accounted for only 25 percent of the total revenues for telecom operators in 2005. The good news for the operators is that they have widely built out their broadband networks over which VoIP service can be offered and the percentage of revenues the telecom operators gain from VoIP is expected to rise significantly, the report concluded.
This seems unlikely anytime soon, but it’s important to note, nevertheless:
IT chiefs were have been warned to prepare for the possibility of new corporate governance rules that would require them to keep records of voice-over-IP (VoIP) conversations alongside email, instant messaging and other forms of communication.
Speaking at the Symantec user event in San Francisco last week, Jeremy Burton, a senior vice-president at the security specialist, said, “Financial institutions in the US already need to keep voicemail because it is stored on disk. As soon as the regulators figure out that VoIP is a digital stream, they will probably try to force that to be kept as well.”
Calls would have to be stored in their original audio format, rather than being automatically compressed and indexed using speech-to-text tools, according to Burton, because otherwise lawyers could argue that the original content had been altered. He added that any VoIP archiving legislation is at least two to three years away, but the prospect still alarmed IT managers already struggling to meet existing compliance requirements and manage rapidly expanding data volumes.
Chris Kadwill, ICT manager at Luton Borough Council, said he is resigned to rules demanding VoIP archiving in future. “We have a call centre employing 70 agents that handles over 300,000 telephone calls a year. If we have to record and store all of those, we are talking about many extra terabytes of data,” he added.
Legal experts foresaw other challenges. “There would be an obstacle in recording telephone conversations as that’s unlawful unless certain conditions are met,” said Mike Conradi, head of technology practice at law firm Stephenson Harwood.
