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Credit First Service Union (AXcess News) Reno, NV - Vonage Holdings Corp. (NYSE: VG)
attempts at getting customers of the Internet telecommunications
company to pay up on stock buys in its IPO are proving difficult to
enforce thanks to errors in its communications regarding Vonage's
public offering.
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Card Credit Mobile Service Vonage had set aside a portion of the shares sold in its May
24th IPO for its customers. The VoIP provider theorized that its
stock would rise in the aftermarket once it started trading, thanks
in part to loyalties from its customers. But the plan backfired
when Vonage's shares fell on its IPO debut, which made customers
unhappy and many unwilling to fork over the cash for the stock.
That has created a serious problem for the Internet
telecommunications company in getting them to pay up.
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Card Credit Discover Service Vonage said in a statement released on Wednesday that customers
allocated shares in the public offering are "obligated to purchase
their share allocation from the underwriters." The move has not
pleased Vonage customers, with many balking at having to buy the
stock when Vonage had earlier signaled that they didn't have
to.
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Credit Public Service Union The company had issued a statement on Tuesday saying it would
not hold underwriters of its IPO liable if some Vonage customers
refused to pay after having signed up for the stock purchase
plan.
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Card Credit Processing Service Vonage's move on Tuesday lead customers to believe that they
could get out of having to buy its IPO shares and has caused a
legal nightmare as no company has ever used instant messages and
e-mail to communicate with customers in an offering to sell
registered shares. The move itself was questioned at the time of
its IPO as to whether the offer was permissible under securities
rules.
Center Credit Service Union Information Week's Eric Hall pointed out that "By implying that
customers wouldn't have to immediately and unconditionally lose the
money they had committed to spend, the company gave them a sense of
relief." Hall thinks that there were some Vonage customers who were
over-enthusiastic and may have committed to buy more shares than
they can afford, and he may be right.
Card Credit Service Wireless Vonage lovers were sure to expect that the rest of the world
thought Vonage was the greatest thing to come along since sliced
bread and "bet the farm", so to speak, in their stock purchase
commitment, thinking Vonage's IPO shares would take off. What
Vonage's shares managed to take off was about 30 percent of their
IPO price in a matter of two days.
Credit Security Service Union Hartley Bernstein of stockpatrol.com says its highly unusual for
a company to have used the Internet in the first place to
communicate with its customers in buying its IPO. AXcess News
concurs. To our knowledge, there has never been an IPO done where
instant messages were sent to prospective buyers during the
registration period, let alone e-mail or other virtual
communication methods.
Credit Report Service Vonage's shares closed up 35 cents, or over 3 percent, Friday at
$11.98. But that closing price is a long way from its $17 IPO
pricing just two weeks ago.
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