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Technology Stocks : Vonage Holdings -- Ignore unavailable to you. Want to Upgrade?

To: pcyhuang who wrote (60)	5/11/2007 6:05:30 AM
From: pcyhuang	Respond to of 141

Latest Development in VG's patent fight Vonage's Patent Fight (May 11, 2007) Internet-phone provider Vonage Holdings Corp. said it has developed the means to side-step some patents held by Verizon Communications Inc., but reported its legal battle with the phone giant hurt its bottom line in the first quarter. A federal appeals court could decide as soon as July whether to uphold a lower-court decision that found Vonage had infringed three Verizon patents related to Internet calling. Founder and interim Chief Executive Jeffrey Citron said yesterday a work-around for two of the three patents would be addressed by a software update "over the next few weeks," requiring little effort on the part of customers. The company is working on a solution for the third patent, which deals with the transmission of Web calls over Wi-Fi networks. Vonage says less than 10% of its subscribers use Wi-Fi cordless phones. Vonage shares were up 33 cents, or 10.8% to $3.38 in 4 p.m. composite trading on the New York Stock Exchange. The company's stock went public last year at $17 a share. Vonage is asking the Federal U.S. Circuit Court of Appeals to send the case back to the Eastern District of Virginia, arguing that the lower court's interpretation of Verizon's patents was improperly broad. Vonage will also base its appeal on a recent Supreme Court ruling that could make it easier for companies being sued on patent-infringement grounds to argue the inventions at issue are "obvious," and shouldn't be protected under the law. In an interview, Mr. Citron said he expects Vonage will use the Supreme Court decision to defend itself in a separate patent lawsuit by Sprint Nextel Corp. that is expected to go to trial this fall. Mr. Citron added he still hopes the two sides will settle. The Verizon case has taken a toll on Vonage financially, adding to the company's challenges as it battles cable operators for customers. Vonage yesterday reported that it had narrowed its first-quarter loss from a year earlier, when it was still private. Excluding royalties the company was ordered to pay Verizon by the lower court, as well as litigation costs, Vonage's loss would have been $50 million, or 32 cents a share. Vonage added 166,000 net new customers, finishing the quarter with nearly 2.4 million subscribers. But supporting a bigger user base caused administrative and overhead costs to jump 72% over last year, to $91 million. The company said it is cutting $140 million in costs this year by paring marketing and cutting jobs. Mr. Citron also said Vonage is going to change its marketing strategy from a national one to one focused on regional and local advertising. Full Story: online.wsj.com Chart analysis: A double-bottom breakout on the hourly chart? stockcharts.com. pcyhuang