Vonage = Slippage

Telecom & Wireless

Published: March 23, 2007 11:50 am

Vonage (VG) already went from bad to worse, and today went to even FAR WORSE. This was already one of the worst IPO’s in recent history. Now it is not even possible to calculate the exact impact. A federal judge issued a permanent injunction Friday that prevents Vonage from using key internet telephony technology rights owned by Verizon Communications (VZ).

The granted request to Verizon’s injuction prohibits Vonage from using some if the VoIP technologies that make their telephone calls work. This one is not over yet, but there is probably going to be a lot more pain felt by shareholders.

Shares of Vonage were halted at 12:13:46 today, but it looks like the shares fell 6% more to $3.799 before the halt was enacted; no resumption time has been set. This looks like it is going from ugly to fugly, and now there are questions of how Vonage will survive. The company might not be able to afford the royalties that Verizon will demand, and if so then customers around the country will probably have to worry about getting new service installed elsewhere.

What would Homer say? Doh!

Jon C. Ogg
March 23, 2007

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