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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, August 24, 2006

Vonage's Thin Volume Mystery Rally

Vonage (VG) is up 6.5% today at $7.25. The odd thing is that there is no fresh news from the company. This is in light of a recent announcement of free VoIP from another company, although that isn't really going to be a Vonage replacement for the minions of customers that love VoIP. There has been some additional insider buying as of yesterday on the wires, but the real reason may lie in the Bear Stearns initiation of coverage yesterday with a "Peer Perform" rating. It's odd that there aren't really any pure-play peers of any size, but that was there call. it looks like the street may just be relieved that there wasn't another Sell rating doled out by a respected analyst. The August short interest data shows that 5.6 million shares are in the short interest. The trading volume is actually light in the stock and there hasn't been any flurry of activity seen in the September or October stock options showing anything suspicious. The recent D-Link deal didn't have any financial terms disclosed, so this may just be a "sellers' strike" where there just aren't any sellers and a small number of buyers able to impact the stock price. A chartist may tell you they have bottomed out. We noted previously that after the last earnings the company may be getting rewarded (or less hurt anyway) merely for the thought that now they have one earnings release out as a public company that it "may" be quantifiable as to if they can exist as their own entity down the road.

Jon C. Ogg
August 24, 2006

Jon Ogg can be reached at jonogg@gmail.com; he does not own securities in any of the companies he covers.
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