Mark Evans does some great analysis of the rumor I reported on yesterday of BellSouth buying Vonage. Does it seem logical to me that each Vonage customer is worth $4,375? No way. My editorial team beat the bushes looking to confirm this story and as you might expect BellSouth had no comment.
An area that Mark didn’t explore in this blog post is the hype surrounding XM and Sirius satellite radio. This hype is backed up with inflated valuations as well. Is Vonage a company that should be compared more closely to XM than 8×8? Yes in my opinion as they are the mindshare leader with no close number two.
If you follow me down this path then you see that logic doesn’t play into the equation at all. I am not sure that comparing Packet 8 to Vonage has any merit either. Packet 8 is a brand that is unknown and Vonage is a brand that is well-known.
If Vonage was to go public, a 3-4 billion dollar valuation doesn’t seem so out of whack to me. XM has a market cap of 8 billion and Sirius is valued at over 9 billion.
Sure satellite radio and VoIP are different businesses, etc. I understand all that but when you are a category leader and you go public you get a premium from Wall Street. A buyer would have to overpay for such a company to purchase them before they go public.
Mark described this all as a nice summer story… One that Jeffrey Citron hopes will have a happy ending I am sure.