No doubt, several hundred million dollars does buy Vonage
But another telecom company will not want to purchase and reinforce a brand that dilutes its own, so the brand value of Vonage would only appeal to a telecom outsider, much like Skype appealed to eBay
As far as the prospect of Vonage being able to up-sell more services to its customers, as I pointed out in my initial argument, the numbers don't show any traction here. Management also estimates that average revenue per user (ARPU) will rise only slightly or stay flat through 2007. That doesn't sound like a whole lot of confidence in customers flocking to new add-on services. While the cost cutting will help slow the burn of cash, the top end looks to be firing on only half its cylinders.
And while I have no way of knowing just how much confidence to put in Vonage's legal defense, Qualcomm's
Overall, the collective picture doesn't bode well for Vonage. And while I agree these are the areas where contrarians look to profit, I just can't come up with anything to justify such a high risk, especially with fundamentally better investing opportunities still out there.
If Fool contributor Dave Mock were to fall in the woods when no one was around, he would most definitely make a sound. He owns shares of Qualcomm. Dave is the author of The Qualcomm Equation. eBay and Best Buy are Stock Advisor recommendations. Wal-Mart is an Inside Value recommendation. The Fool's disclosure policy uses its brand power to make the world a better place.