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Vonage Takeover Could Be Way Out

Industry watchers have suggested that the latest round of bad news for the Internet telephony firm Vonage Holdings Corp. could only end one of two ways: bankruptcy or a takeover. The New York Times' Deal Book believes the latter is more likely, and insiders expect Sprint-Nextel to be a potential suitor.

Sprint, which is suing the VoIP provider for patent infringement, is understood to be interested in taking over the ailing company; that's one possibility for resolving the lawsuit. Other observers have detected hints in recent comments made by Vonage executives. According to Deal Book, Vonage's chief legal officer, Sharon O'Leary, recently said she felt "strongly" the company could "enter into a business arrangement or agreement to resolve that matter."

Vonage was recently ordered to pay $58 million for infringing on patents owned by Verizon Communications; it was also barred from adding new customers. In an SEC filing Tuesday, the company said the risks from continuing litigation include a possible interruption of service, an inability to repay its debt and a decline in its stock so severe the company could be de-listed by the New York Stock Exchange. Vonage's stock has already fallen 81 percent since its initial public offering last year.



Read the whole story at New York Times' Deal Book »

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