Vonage: One More Market Problem

This column was originally published on RealMoney on May 24 at 10:17 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Vonage(VG) is the problem of this market writ large. Here is a company that is in the single-most competitive space in the world, delivering phone service to a home. This is a company that, arguably, loses money on every single customer.

This is a company that got off the ground because Comcast(CMSCA) dragged its butt in offering VOIP. Now Comcast has gotten aggressive and you have a vicious competitor.

Not to mention that the only thing that kept eBay(EBAY) from becoming your phone company via Skype was that it charged for calls outside its system. Now that barrier's gone.

Plus, in Vonage's prospectus, we have obvious conflicts with the founder, ones that are actually disclosed.

That, to me, is quite simply exactly what the stocks looked like that were brought to the market in the latter part of 1999 and the early part of 2000.

Put simply, Vonage is a piece of junk. When you lump that in with a Burger King(BKC) deal that was simply a cash out and a MasterCard deal that is coming public before a major lawsuit is being resolved, you have a symptom, if not the symptom of what's wrong with this market: a flood of supply of bad merchandise with nowhere to go.

And you wonder why we are going down! Jeesh!

P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
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At the time of publication, Cramer had no positions in the stocks mentioned.

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