VoIP, a good investment?

Doodee

the idea was popped into my head whilst having a conversation on stocks the other day.

Any of yaz think that buying stock in one of the british companies providing VoIP is a worthwhile investment.
Mind you, the person i was chatting too wanted similar results to the google rise in price.

nesf

VoIP could really take off.

Or it could just be a redundant technology.

I'd be unsure about it tbh. I could see the telecoms industry going down that path, but I could also see it not doing that due to inertia and people just not adopting the new technology.

If you are going to invest in one, look for a company who can do VoIP to phones on the normal networks. The VoIP only companies aren't going to take off. There will be a big long transition period before a change-over, if one actually happens.


As with any new "promising future" technology, it could go anyway tbh mate. Caution is advised, but perhaps worthy of a punt if feel the risk is worth it. Not a small risk though.

antoinolachtnai

The problem with the VoIP business is that there is no real 'barrier to entry'. It's pretty easy to get into the VoIP business, but the question for investors is what the 'edge' that will be that give one or two operators an edge over the others in the medium-to-long-term?

Hitchhiker's Guide to...

Critical mass and first mover advantage has been shown to be vital in terms of internet technologies. For example, everyone knows skype and that means new subscribers are far more likely to go with them compared to anyone else.

IMHO: an investment in a VOIP company that is IPO'ing would be a good idea. Not because of the profitability of the company itself but purely because a lot of people are excited about VOIP. And they tend to invest in what excites them; often with disregard to solid financials. An earlier investor in a high profile company will probably be able to ride this wave of enthusaism to a nice profit.

As Burton Malkiel wrote in "A Random Walk Down Wall Street" this is not a particularly intelligent approach to investing. He refers to it as "greater fool theory". You are hoping that someone else will be stupid enough to pay you a higher price for your shares than the already high price that you paid for your shares.

So its a very risky strategy. Not for widows and orphans. But, in new technologies like VOIP which are starting to enter the public lexicon this seems to be the only way to invest. You won't be hoping the profits will grow as much as you will be hoping the dreams about the profits will grow. Only for a very small part of any portfolio. But, an IPO investment in a first-to-market or a market leading VOIP company could be very profitable. Just have to know when to sell.

nesf

Roundtower2 wrote:

But, an IPO investment in a first-to-market or a market leading VOIP company could be very profitable. Just have to know when to sell.

You make market timing almost sound easy....

I agree with you though. Personally, I'm in two minds on VOIP, I'd be slow to take anything but a small speculative position on it.

But then perhaps I'm being too cautious

Hitchhiker's Guide to...

nesf wrote:

You make market timing almost sound easy....

lol "the trend is your friend" is about all i know!

nesf

Roundtower2 wrote:

lol "the trend is your friend" is about all i know!

jay567

If your not to tied to the idea of a uk company. Ive been following Avaya for the last year, seems that the idea would be to get with someone thats providing the entire service. Avaya and cisco are the players in the usa. Av went from 13.95 upto a high of 17 and is now bottoming out at 8.20.
cant see them going much lower that this.
Personally, it does seem that voip is something that will catch on but it is excepted that it will take some time for this to happen.

Google is a rare bred, and i cant imagine it coming along again anytime soon. Esp in the voip word.

RainyDay

Doodee wrote:

the idea was popped into my head whilst having a conversation on stocks the other day.

Any of yaz think that buying stock in one of the british companies providing VoIP is a worthwhile investment.
Mind you, the person i was chatting too wanted similar results to the google rise in price.

Unless you know something that the rest of the market (including the professional analysts who spend all day researching this stuff) doesn't know, what makes you think you'll be getting a bargain. The possibility of future gains will be built into the current market price.

defiantshrimp

RainyDay wrote:

Unless you know something that the rest of the market (including the professional analysts who spend all day researching this stuff) doesn't know, what makes you think you'll be getting a bargain. The possibility of future gains will be built into the current market price.

But so will the possibilty of future losses, there could be a large risk discount, perhaps too large (markets aren't always perfect!). But there is no way of knowing really, so you are right.

rsynnott

Sooner or later, the telecoms are going to move against it, particularly the telecoms who are also ISPs, like our beloved Eircom.

secret_squirrel

Its also worth bearing in mind that since there are very few barriers to entry to this market - if any of the teleco's decide that the best way to protect some of the POTS revenue is to start into VOIP themselves - they have the clout and the infrastructure to kill off most of the VOIP companies.

Personally if you take someone like Skype who have a huge number of users (43m?) and assume they will turn a decent percentage of them into subscribers - then they might be worth a wager.