Will Vonage go public or sell out? - Mar. 30, 2006

"But can Vonage parlay its increased consumer exposure into a lucrative initial public offering? Or is the company, which is hemorrhaging money, actually trying to shop itself to a larger telecom firm?
Vonage filed to go public nearly two months ago but it has yet to file any amended registration statements with the Securities and Exchange Commission. That's an unusually long time between filings and has led some telecom industry observers to speculate about whether Vonage might be looking to sell out instead.
'I think they are looking for a buyer. Going public is something in their back pocket,' said Greg Gorbatenko, an analyst with Jackson Securities, a research firm based in Chicago."

Vonage is growing rapidly, with sales during the first three quarters of 2005 more than tripling from the same period in 2004. But expenses have also ballooned, leading the company to report a much bigger loss in the first three quarters of 2005 than it did for the first nine months of 2004.

Marketing costs in particular have skyrocketed. (Woo hoo! Woo hoo hoo!) The company spent $176.3 million on marketing during the first nine months of last year, up from $31.3 million in marketing expenses during the first three quarters of 2004.
Analysts say that if Vonage wants to keep growing, it's going to need a lot more cash.