• Los Angeles Times, Monday, April 9, 2007 11:15 AM

Vonage Holdings Corp. is still in dire straits regarding the injunction U.S. District Judge Claude Hilton handed the Internet phone company for violating three patents belonging to rival Verizon Communications. The struggling VoIP provider was handed a reprieve late last week when the judge issued a partial stay, which allows it to continue offering service to its 2.2 million customers while the company appeals the decision.

The reprieve comes after Vonage's lawyer described the ruling as "cutting off oxygen" to the money-losing company. However, Vonage will not be allowed to bring in new customers during that time, as per the partial stay. This means the company will probably suspend its ongoing and expensive marketing campaign.

One of the patents owned by Verizon is essential to Vonage's operation: The technology that connects Internet phone customers to the public phone network. Vonage stock received a slight bump on the news Thursday, closing at $3.37. Analysts are unconvinced that Vonage can recover, especially in an age where TV companies are offering triple- and four-play media service. As Blair Levin of Stifel, Nicolaus & Co. says, "Even without the patent dispute, [Vonage has] significant problems ahead of them as a business."

Read the whole story at Los Angeles Times »