Internet telephony startup Vonage Holdings could not have chosen a better day to go public.
In the days ahead of its IPO, analysts, journalists and even bloggers began to question the long-term viability of its business model. Clearly, the entrance of other Internet telephony providers not to mention the myriad of telecom options consumers face, shows that Vonage simply was the first in a market that has relatively low barriers to entry — hence the questioning.
Rather than having the hottest IPO of the year, the questioning has led its shares to slump 12% on opening on the New York Stock Exchange. Last night, the Holmdel, N.J. company priced its shares at $17 a piece raising $531 million.
Of course the poor performance only matters to its venture investors and underwriters. Whether Vonage's underwriters — Citigroup Inc., Deutsche Bank Securities, UBS Investment Bank, Bear, Stearns & Co. Inc., Piper Jaffray Cos., and Thomas Weisel Partners LLC — intended or not, they chose to ferry Vonage public the day before MasterCard International's $2.6 billion offering. Consequently, Vonage and its underwriters will only face a day of bad press as the short attention span of journalists and bloggers turn their eyes to MasterCard, whose IPO promises to be the second largest ever behind that of Genworth Financial, which raised $2.83 billion in 2004. —Matthew Wurtzel
See Vonage story from The Deal
See MasterCard story from Reuters
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