« David Phillips on Arden Group | Main | The Fall of Fannie »

I know the big worry now is supposed to be inflation. I’m sorry, but I can get into it. It’s like sake. I know I’m supposed to like it, but I just...can’t. I’ve looked at the inflation numbers and it doesn’t seem like that big a deal. Sure, it’s probably true that the government understates inflation, but that’s the kind of thing governments do.

Jeff Matthews had a great post mocking the idea of the core rate of inflation. As usual, he’s right. But I’d like to add that I don’t often use gold or silver or platinum in my day-to-day dealings. If I did, then the prices probably wouldn’t bother me anyway.

Let’s remember that there are areas where prices are falling. At the same time, we’re told that Dell is a complete mess because its competitors are underpricing it, and inflation is roaring back.

If you want to watch for falling prices, just look at the Vonage (VG) IPO. Well, the offering price is certainly inflating. The offering is oversubscribed. But the price of voice-over-Internet protocol (VoIP) is plunging. And so will Vonage’s share price.

Check out this gem from a Reuters article on Vonage:

Vonage has acknowledged that it may never be profitable and is viewed with skepticism by many analysts, who cite the growing competition it faces in providing voice-over-Internet protocol (VoIP) services.

"We haven't liked the offering since we first saw the registration," said David Menlow, president of IPOfinancial.com. "There are so many other companies out there that can deploy this strategy or this product in a heartbeat."

For the love of carbs! May never be profitable??

In 11 years, the company has never made a profit. All told, Vonage has lost over $460 million, which is roughly the amount it will raise from its IPO. (Irony, no?)

In the first quarter, the company had sales of $119 million, and it spent $88 million on marketing.

Posted by edelfenbein at May 23, 2006 1:25 PM