Vonage Gets Brief Reprieve

The troubles aren’t over for Vonage by any means, but it’s very good news that the U.S. Court of Appeals for the Federal Circuit granted a stay on the injunction which would have prohibited Vonage from signing up new customers while their appeal works through the courts on an expedited schedule.

While the appeal is pending, Vonage will continue paying a 5.5 percent royalty rate on all future sales to an escrow account, and it has posted a $66 million bond required by the lower court.

News of the stay sent their stock rebounding by 50%. The stock price has since declined from that momentary spike.

The ruling may be good news for Vonage and its investors for now, but analysts warned that an uphill battle still lies ahead. The company has already admitted in a recent Securities and Exchange Commission filing that its legal woes could lead to bankruptcy, and it was losing customers even before the jury revealed its decision in the Verizon case.

Under the circumstance, it seems unlikely that marketing efforts will prove successful in wooing new customers. Who would want to sign up for something as mission critical as telephone service with a company teetering on the brink of extinction?


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