Vonage to IPO dropouts: we're goin' after ya

Oh, great. Just when Vonage needs to cut its rising churn rates (9.5 more in 2Q than in 1Q of this year) they are getting ready to go after some of their loyal customers.

Those would be the loyal customers who believed so much in the company that they participated in the company's 4-million-share Directed Shares Program prior to the IPO.

Now it seems that $18 million of those purchases- slightly over one million shares at the $17-per-share DSP price- has not been paid.

It is pretty obvious that most of this amount has not been tendered because investors saw Vonage's stock price tank right after the IPO, and assumed they'd been had.

Although my informed layperson's reading of the IPO seems to indicate that they needed to pay this money anyway, it is not a huge leap of faith to see this refusal to pony up as being encouraged by phalanxes of attorneys who investors contacted. These could well  be some of the same attorneys who, after they heard these stories, conducted targeted research that led them to file class-action suits. There are what now, 17 or 18 of these complaints?

So to put it another way, we've had a chain of events that has involved:

1. Starry-eyed, clueless investors buying into a company with an unsustainable business model;

2. The financial markets expressing this unsustainability by driving the stock downward;

3. The gullible seeking an out in the comforting bosom of their attorney's advice;

4. Attorneys giving that advice as they smell blood in the water and investigate the possibility of class-action suits;

5. The same attorneys hiring researchers who troll the user boards looking for tales of unsatisfactory Vonage technology, and then use those isolated incidents to buttress already questionable assertions about what might have been missing from the disclosures in Vnonage's IPO;

6. The class-action suits acting as further reassurances to investors that they do not have to pay up;

7. Vonage being convinced they have a right to that $18 million- and saying they are going to go after those who have not fufilled their pledges to buy shares.

In short, my opinion is that Vonage has a right to this money. But even if they get some of it, what's next?

How many potential subscribers will be scared away from doing business with a company that sues their customers? 

And even if Vonage gets a respectable portion of that $18 million, -say, $10 million- what are they gonna do with it? Pour it into more banner ads and woo-hoo, woo-hoo-hoo, that's what.