Daily Archives: August 25, 2009

Vonage Fails to Explain Head-Spinning Stock Surge

Vonage shares were on a blend of methamphetamine and acid today, gaining an obscene 165 percent in a single session and reminding us all of the late 1990s when this type of thing was as commonplace as active venture capitalists.

But this isn’t the late 1990s, and the Vonage surge can’t last unless there are good reasons for it — and there aren’t.

Vonage was forced to issue a statement tonight to shed light on the share-price madness. Not much light was shed.

Said Vonage:

Three weeks ago, the company announced financial results which included record adjusted EBITDA of $31 million, positive net income for the first time in the company’s history and positive cash flow. Last week, the company launched Vonage World which provides flat rate unlimited calling to over 60 countries with unlimited readable voicemail (visual voicemail). Initial interest has been strong. Additionally, the company previously announced that it expects to enter the mobile applications market, which has garnered a great deal of attention in recent weeks and months.”

That’s not nearly enough to justify what we’ve seen today, nor is it sufficient explanation for the stock’s gain of more than 300 percent in the last six trading session. Either there’s more to the story than Vonage is presenting — and I don’t think there is — or the stock has been possessed by a dark speculative spirit of unknown provenance.

The exorcist might be called overnight, though, and we could see Vonage shares trading sharply lower tomorrow.

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Protecting Yourself from Scams on Facebook

If you must use Facebook — and I personally advise against it every chance I get — you ought to be extremely careful about how much personal information you share with the social-networking site’s burgeoning masses of subscribers.

Depending on how much information you choose to disclose about yourself on Facebook, you could become the victim of fraud. As Facebook continues to grow, the scams will proliferate and get worse.

It is possible to use Facebook while limiting your exposure to extortion, fraud, and identity theft, but you cannot and should not rely on the site to take those precautions on your behalf.

The first step, as CNET News’ Dennis O’Reilly explains, is to edit your personal profile. You’ll want to eliminate any personal information that could be exploited for criminal purposes. You are wise to err on the side of caution, so if you’re unsure about a particular detail or revelation, delete it.

When that’s done, you’ll want to follow O’Reilly’s example and modify your Facebook account’s default privacy settings, which are intentionally lax to facilitate information sharing.

It isn’t Facebook’s fault that online criminals are gravitating to it as a venue for exploitation of the trusting and unwary.

Still, Facebook should give serious consideration to devising and implementing more stringent privacy settings for the patrons who have made it an increasingly attractive target for prospective advertisers and crooks alike.

Vonage Spikes, Bemuses Market Watchers

Shares of VoIP pioneer Vonage were driven up in value yesterday, and they were on a tear again early today.

The problem is, nobody seems to know why the shares are surging. Some speculate that the stock’s recent upward mobility relates to strong adoption of its recently expanded “Vonage World” international-calling service. The service went from availability to 13 countries to applicability for calls to 73 countries — with India, China, and Mexico now covered.

It’s entirely possible that the expanded “Vonage World” is experiencing a spike in adoption. But I suspect we’re seeing an old-fashioned momentum rally here.

Nothing essential has changed for Vonage, and it faces the same intractable business challenges and competitive threats that were arrayed against it last week.

I’ll advise the independent investors in our midst to follow the same advice Sergeant Phil Esterhaus proffered to his fellow officers in the squad room of Hill Street Blues: “Hey, let’s be careful out there.”