TAKEOVER - my favorite subject!
Vonage has been beaten down to WAY UNDERVALUED by problems that have been solved in the last months!
Look at the numbers -- customers up, revenues up, adjusted earnings up, adjusted cashflow, new features and products:
New products rolling out:
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Here are the charts they put out for the end of the year, 4th quarter numbers.
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From the Citi conference - up to the 3rd quarter
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As has been said, the debt, which is less than 1/3 of their projected Revenues this year and about equal to their marketing spend, will have to be restructured.
Once the restructuring is done and share price has popped up to a reasonable number, the road to takeover will be wide open!
WHY would anybody take them over?
1.) GREAT UNIVERSAL PRODUCT - Useable anywhere there is broadband!
2.) $900 million Revenues projected 2008
3.) $1 BILLION Revenues projected 2009
4.) Adjusted Cash flow Positive CFP last two quarters.
5.) ADJUSTED POSITIVE EARNINGS PROJECTED 2008
6.) Great Name Recognition, with the recognised best product.
7.) PPS beaten down by Lawsuits that have been already settled.
8.) HUGE MARKET, INTERNATIONAL, not limited by proprietory service, OR existing customers.
9.) New products and services!
WHO would be likely take them over?
1.) ANY one of the CABLE Companies, if they wanted to expand outside of their territory, internationally, or just plain want to become the largest supplier.
2.) ANY one of the TELCO Companies, national or INTERNATIONAL, if they wanted to expand outside of their territory.
3.) ANY of the MEDIA GIANTS could be interested. Google, Yahoo, Microsoft, etc. Imagine what they could do with this company?
I SEE ON THIS BOARD THAT GOOGLE IS RUMORED TO BE LOOKING AT SKYPE!! It's not out of reason for someone to be shopping VG!
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HOW MUCH would a reasonable takeover offer be?
Even though Google may be ready to pay, 4x to 8x revenues for skype, I still stick with a conservative 1X-2X revenue range, common in telecom.
Lets use the $900 million projected revenue number, add their cash and subtract that upcoming debt!
It leaves us with $800 million. The 1x to 2x range for PPS would be $5+ to $10+ PPS! (quadruple that for the google/skype range!)
As always,
JMO
Dave |
