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Technology Stocks : Vonage Holdings

VG 8.040

-3.7%

1:20 PM EST

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From: Done, gone.	4/9/2007 3:25:56 PM
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The Bottom Line No matter what, Vonage is going to find itself squeezed financially. The court already ordered the company to post a $66 million bond to cover the award the jury granted to Verizon in March. Come April 12, it's expected the judge will rule that Vonage has to shell out even more cash. Verizon is seeking an additional $189 million bond to cover its damages, according to Stifel's Levin. Should the court uphold the injunction and require Vonage to stop signing on new customers, then the company will have to spend even more money to acquire a new VoIP provider or develop a new technology. Considering Vonage's losses, any of these moves is going to be tough for the company to afford. In 2006, the company recorded a net loss of $286 million, or $3.04 a share, versus a loss of $261 million in 2005. All of these options create a lot of static for Vonage. If the company continues to be on the wrong side of the court, it could find its signal completely dropped in the end. For most investors, that means the risk is nowhere near any potential reward. Excerpt from: smartmoney.com

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