Vonage and Its Weather Vane Moment

What's interesting is that it could go either way, which is why Vonage's $250 million IPO bid is worth following, whether or not you invest. Vonage had little choice but to try for an IPO after eBay bought Skype for a mouthwatering $2.6 billion.

Yet its IPO could quietly die on the vine, as did Buy.com's public-market dreams late last year. Or it could sneak past the IPO censors and get a chance to sink or swim on its own merits as the VoIP saga plays out.

Look closely, though, and the preponderance of evidence that Vonage has offered so far says it will sink. The company may remind some observers of TiVo , the digital-video recording service that also launched a new tech niche while producing losses.

But TiVo's stock is up 54% in the past year amid speculation it would be bought, while Vonage's technology is being copied by the Baby Bells and is being surpassed by Skype and others. TiVo also boasts 4 million subscribers, compared with 1.2 million for Vonage.

As Scott Moritz reported and as Colin Barr hammered home later, there is plenty in Vonage's prospectus to give you the stomach-in-the-throat sensation you get just when the roller-coaster is about to make a precipitous dive.

Both writers also mentioned Jeffrey Citron -- who has shepherded Vonage so far. At Datek Securities, Citron just didn't settle with the SEC, he paid $22.5 million in fines, "among the largest fines ever collected by the SEC against individuals," the filing says. In addition, Citron faces "bans from future association with securities brokers or dealers and enjoinments against future violations of certain U.S. securities laws." Yet Citron is staying on as Vonage's chief strategist -- whatever that means. For most companies, the CEO is the chief strategist.