Vonage Loses VoIP Patent Case to Verizon; Stock Reaches New Low

7:15 am on March 10, 2007 | Category: Business, VoIP, Telecom Services, Law

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A federal jury dealt a major blow to broadband phone provider, Vonage Holdings Corp. on Thursday, ruling that the company has infringed on three Voice over IP patents owned by Verizon Communications.

The eight-member jury ordered Vonage to pay damages of $58 million to the telecom giant, plus 5.5% royalties on all future sales. This wasn’t as severe as the $197 million in damages and 19% royalties sought by Verizon, but will still have a serious effect on Vonage, which reported a net loss of $65 million in the fourth-quarter, and remains a long way from profitability.

“In and of itself, it doesn’t render its business model as not viable, but I think it will have a significant impact on the stock,” predicted Stanford Group analyst, Clayton Moran, while noting that the verdict was harder on Vonage than he expected.

Shares in Vonage, which opened at $17 in May 2006 and have performed miserably ever since, declined 8% in the hours after the ruling, and closed at a record low of $4.17 in Friday’s trading.

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    1. definitely not good news for Vonage at this point. They started selling minutes for mere pennies afterwards, too. It’s almost like a “going out of business sale”.

      Nationwide Long Distance

      Comment by vic — March 20, 2007 #

    2. Of course Verizon will try to take out their rivals. Vonage was on the rise after a troubling start and now verizon has to get in the way. The major high speed internet companies will do anything to take out anyone lol. http://t1blowout.com

      Comment by john — November 7, 2007 #

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