Got vonage? better get something else quickly
 

http://www.nypost.com/seven/04072007...paul_tharp.htm

By PAUL THARP
(Click to enlarge.)April 7, 2007 -- Tripped by its own missteps, the money-losing Internet phone company Vonage is closer to its final breath.

In the latest legal fight for its life, the beleaguered online carrier won a last-minute reprieve late yesterday from a judge's damaging order that blocked Vonage from signing up new customers - punishment for illegally using three Verizon patents to deliver service.

Vonage's lawyers called the judge's order a death sentence, but an hour later, Vonage scored an appeals court win halting the punishment, at least for a month.

A three-judge appeals panel in Washington, D.C., will review the case before making its decision, lawyers said, allowing Vonage to keep signing up new customers for now.

The cliff-hanger began earlier in the day when a Virginia federal judge who'd presided over last month's patents-hijacking trial banned Vonage's new customer sign-ups. However it allowed Vonage to continue serving its 2.2 customers.

Vonage's lawyer called the ban a death sentence.

"It's the difference of cutting off oxygen as opposed to the bullet in the head," said Vonage lawyer Roger Warin.

Last month, a Virginia jury said Vonage infringed on three Verizon patents, and should pay Verizon $58 million, plus 5.5 percent of revenue from related phone line sales.

A cutoff of new customers could bring Vonage to standstill, said its lawyer.

The company already loses 2.5 percent of its customers monthly due to high turnover, and will lose close to 700,000 in less than a year, Warin said.

Vonage had about $499 million cash on hand as of December, but its stock has collapsed since going public 10 months ago, wiping out more than $2.1 billion in value.

On Thursday, prior to the court decision, Vonage traded at $3.37, off 25 cents, down from its initial offering price of $17.

It hasn't made a profit since it was founded in 2000 by entrepreneur Jeffrey Citron, 36, who had to resign as CEO a year ago after the Securities and Exchange Commission accused him of fraud in an order-fixing scheme on the Nasdaq. He owns about 31 percent of the shares.

Vonage also faces lawsuits from investors who claim management misled them and concealed issues that have led to the patent infringement lawsuits.

Damn, there go those funny commercials.

HAHA I thought the same thing!

Sunrocket works well for me - less expensive too...

How much do you want to bet that they are in violation of the same patents and will be a target of similar litigation in the not too distant future.

Wouldn't take that bet, but the lawyers go after the biggest fish first and the Vonage litigation is far from over. If Vonage is able to get the verdict overturned, it's "game over", but the more likely scenario is a royalty settlement less than the 5.5% in the verdict. More info in this Forbes article. According to Forbes, Sunrocket is the easiest target, but the cable companies would be the most lucrative, if tougher to take down.

We'll see - I have more pressing things to worry about right now without "borrowing" future problems.

If this is a long distance company then no worries here. I haven't had one in years. I just use the cell phone for that. :thumbup:

"Whoo hoo whoo hoo hoo!" no more.

I don't know much about the telecom thing but I would guess that Time Warner might be next then. Verizon would be in for an expensive fight but they've got the incentive with their Fios service rolling out. They'd want to eliminate the competition. Rather than expensive and protracted lawsuits Verizon should just be more price competitive and offer a reasonably priced alternative to cable. I would switch from Time Warner to Verizon if they made it worth my while. To me, it's like the record companies screaming about file sharing and all the money they are allegedly losing. There will always be people who want it for free but if you price it fairly, people will pay.