• The Wall Street Journal, Friday, August 10, 2007 12 PM

Vonage announced yesterday that it had narrowed its loses in the second quarter by trimming spending, but heavy cuts to the marketing budget of the Internet calling business took a toll on new subscribers. The company cut its marketing expense to $68 million from $90 million a year earlier.

Vonage added 57,000 net new customers in the period, bringing its total base to 2.5 million. It added 166,000 net new customers in the first quarter, which was considered a disappointment.

A jury's finding that Vonage infringed key Verizon patents related to Internet calling has raised fears Vonage may eventually have to shut down its service. CEO Jeffrey Citron said he expects more subscribers to sign on as the negative publicity fades and Vonage begins to push its more targeted ad campaign. He says the company has completed a technological "work around" for two of the three patents in the case and is developing a solution for the third.

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