Vonage’s Technical Workaround for AT&T Patent: $39 Million Over 5 Years
by John Paczkowski
Posted on November 8, 2007 at 9:38 AM PT
About the best thing to be said about Vonage’s third quarter was that it was an improvement over the second. Which isn’t saying much–especially since the $161.8 million loss the company reported was more than double that of a year ago, weighed down by the legal costs of a pair of major patent disputes.
Still, quarterly revenue did grow to $211 million from $162 million, a bit ahead of the Street’s estimate of $210 million. And Vonage signed up some 78,000 new customers, though customer loyalty remains a problem. Churn–the percentage of subscribers who cancel service–rose to 3% from 2.5% in the prior quarter.
Best of all, Vonage has settled another of the patent-infringement lawsuits against it–this one with AT&T. Under the terms of the agreement, Vonage will pay the telecom $39 million over five years. Not exactly a pittance, but certainly less than the $80 million Vonage paid to settle its dispute with Sprint Nextel and a hell of a lot less than the $120 million it may end up forking over to Verizon.
Vonage’s long-suffering investors reacted well to the settlement, sending shares in the company up 16% to $2.38.
