Everybody Loves Vonage

Vonage (NYSE: VG  ) is off to the races. Shares of the rocky dot-com telco traded as much as 23% higher today after it introduced its first Vonage Mobile application, which will work with Research In Motion's (Nasdaq: RIMM  ) BlackBerry and Apple's (Nasdaq: AAPL  ) iPhone and iPod touch devices.

The free app offers prepaid access to discounted international phone calls. Unlike eBay's (Nasdaq: EBAY  ) Skype and other Web-based telephony apps, Vonage Mobile isn't restricted to Wi-Fi access. BlackBerry and iPhone users can make their cheap calls over their wireless carrier's network.

This is a huge concession, especially for AT&T (NYSE: T  ) , which has been historically stingy with its iPhone contract exclusivity. Everything from tethering to Google (Nasdaq: GOOG  ) Voice has hit a brick wall on the iPhone, but now Vonage squeaks through with a way to let people call overseas for a discount ?

Vonage has been here before. The stock opened 44% higher last month, after announcing the approval of its App Store application. The company quickly gave a lot of that gain back, though, when it failed to elaborate on what its app would do.

This morning's news is a surprise. Marked-down international calling may not appeal to many iPhone and BlackBerry owners, but this is just the first of Vonage's mobile applications. Future apps could possibly turn to domestic calling or provide enhanced features for existing Vonage customers.

Vonage still has a way to go before it's profitable on an annual basis, but this formerly moribund dud of an investment now has all the shine of a story stock.   

Google is a Motley Fool Rule Breakers pick. Apple and eBay are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz is not a Vonage customer and doesn't own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On October 05, 2009, at 2:56 PM, sapereira wrote:

    I agree with your article - you wonder Vonage did not display profits in earlier years but had huge marketing spend levels. I figure that will reduce - now that International Calling and Mobile Apps has launched.

  • Report this Comment On October 05, 2009, at 9:36 PM, militauro wrote:

    Vonage can develop 50 mobile applications and it wouldn't save their life. I personally think this stock can't compete, but it's biggest problem lies in customer service. Their service is horrible and not worth the low price. I'm a customer myself (waiting for contract to expire) and their service is beyond horrible. Just look at their rating with the Better Business Bureau.

    Sorry Vonage, consumer level experience helps pick out winners and you are not one.

  • Report this Comment On October 09, 2009, at 11:49 PM, foolbond wrote:

    Here's what i uncovered from the BBB. And here's the link -> http://www.bbb.org/new-jersey/business-reviews/data-communic...

    BBB processed a total of 9532 complaints about this company in the last 36 months, our standard reporting period. Of the total of 9532 complaints closed in 36 months, 2321 were closed in the last year.

    These complaints concerned :

    231 regarding Advertising Issues

    7 - Advertised price not honored

    16 - Advertised terms not honored

    4 - Advertisement did not disclose all conditions required to take advantage of an offer

    35 - Advertisement misrepresented a product

    97 - Advertisement misrepresented a service

    2 - Bait & switch advertisement

    20 - False or unsubstantiated claims in advertisement

    50 - None of the Above - Advertising Complaint Issue

    2899 regarding Billing or Collection Issues

    237 - Failure to correct billing errors

    3 - Failure to provide itemized billing as requested

    563 - Improper collection practices

    446 - None of the Above - Credit, Billing or Collection Complaint Issue

    27 - Unauthorized bank debits

    323 - Unauthorized credit card charges

    359 regarding Contract Issues

    112 - Failure to honor a contract or agreement

    160 - Invalid or false contract

    62 - None of the Above - Contract Complaint Issue

    23 - Unauthorized changes to the contract or agreement

    2 - Work performed outside the terms of the contract or agreement

    56 regarding Customer Service Issues

    11 - Failure to provide promised assistance or support for products or services

    8 - Failure to respond to phone calls or written requests for assistance or support

    14 - Inappropriate behavior by customer service personnel

    23 - None of the Above - Customer Service Complaint Issue

    70 regarding Delivery Issues

    4 - Delivery of unordered products

    1 - Delivery of unordered services

    1 - Late delivery of products

    2 - Late delivery of services

    30 - Non-delivery of products

    14 - Non-delivery of services

    18 - None of the Above - Delivery Complaint Issue

    76 regarding Guarantee or Warranty Issues

    1 - Disputed warranty coverage and/or terms

    64 - Failure to honor money-back guarantees

    8 - Failure to honor service under the terms of warranties

    2 - Failure to provide promised written warranty or guarantee

    1 - None of the Above - Guarantee or Warranty Complaint Issue

    270 regarding Product Issues

    213 - Defective, damaged, or incorrect product received

    57 - None of the Above - Product Quality Complaint Issue

    2717 regarding Refund or Exchange Issues

    135 - Failure to honor promised refunds, exchanges, or credit

    2115 - Failure to honor refund, exchange or credit policies

    438 - None of the Above - Refund or Exchange Complaint Issue

    27 regarding Repair Issues

    11 - Delayed completion of repair

    8 - Improper or inferior repair

    8 - None of the Above - Repair Complaint Issue

    599 regarding Sales Practice Issues

    8 - None of the Above - Sales Complaint Issue

    7 - Sales presentation did not disclose complete pricing information

    3 - Sales presentation did not disclose key conditions of the offer

    21 - Sales presentation misrepresented the product

    134 - Sales presentation misrepresented the service

    424 - Sales presentation used dishonest sales practices

    2 - Sales presentation used high pressure methods

    2228 regarding Service Issues

    380 - Delayed completion of service

    1 - Failure to honor service estimate or agreement

    1 - Failure to provide invoice or estimate for service upon request

    1629 - Improper or inferior service

    204 - None of the Above - Service Complaint Issue

    13 - Unauthorized service

    These complaints were closed as:

    9022 Resolved

    1189 - Company resolved the complaint issues. The consumer acknowledged acceptance to BBB.

    7574 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to BBB.

    255 - Company resolved the complaint issues, but not within BBB's timeframe.

    1 - Complaint was settled through arbitration in accordance with their BBB agreement.

    2 - Company offered a partial (less than 100%) settlement which the consumer failed to acknowledge acceptance to BBB.

    1 - Company offered a partial (less than 100%) settlement which the consumer accepted.

    508 Administratively Closed

    11 - Company agreed to arbitration in accordance with their BBB agreement, but the consumer declined.

    388 - BBB determined that despite the company's reasonable effort to address complaint issues, the consumer remained dissatisfied.

    107 - BBB determined the company made a reasonable offer to resolve the issues, but the consumer did not accept the offer.

    1 - The parties could not provide sufficient information to support their positions nor were they agreeable to make reasonable efforts toward resolving the issues of the dispute.

    1 - BBB determined the company provided proper verification that indicated there was no obligation to resolve the issues of the complaint.

    1 No Response

    1 - Company failed to respond to BBB to resolve or address the complaint issues.

    1 Unpursuable

    you may form your own opinion after going through this.

    thanks jay

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