When word came though that Vonage (VG) had settled its patent suit with Verizon (VZ), the VoIP company’s shares moved up 70% to over $2. The small company has settled another action with Sprint (S) and has one pending with AT&T (T). So, its legal problems are not over.
Vonage has about $250 million in cash at the end of the June quarter. The Verizon settlement will probably cost $100 million. AT&T is going to want something. And, in the most recently reported period, Vonage had an operating loss of $33 million.
But, that is not the worst news for the internet telephone pioneer. The large phone companies like Verizon are beginning to get dividends from all of the fiber they have put in the ground. Numbers out of Comcast (CMCSA) show that its growth in digital cable subscribers and VoIP customers slowed last quarter. The phone companies can not offer solid services with voice, broadband, and TV. That means that the competitive market has changed considerably for cable companies and Vonage.
Vonage had a large pricing advantage over its competition when it first came to market. That is gone now. And, with little cash left, so is Vonage.
Douglas A. McIntyre
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
