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Vonage gets pummeled in court again

Posted Sep 26 2007, 03:44 PM by Kim Peterson
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Tough week for Vonage, the one-time Internet calling darling that has more courtroom drama than a season of "Law & Order." But I think the company could be an attractive acquisition target.

Today an appeals court upheld a verdict against Vonage in a patent case involving Verizon. Now the courts will recalculate how much money Vonage should pay (the previous total was $58 million plus 5.5 percent royalties on future sales). Trading was halted briefly on the stock, and its share price fell 26 percent to 96 cents.

This follows yesterday's news that a jury found Vonage guilty of infringing patents owned by Sprint Nextel. Vonage was ordered to pay nearly $70 million, which caused the stock price to plummet 34 percent. Woe to the investors that got in at the company's $17 IPO price.

But Vonage's problems run much deeper than patent infringement. The company only added 57,000 subscribers in the second quarter, down from 166,000 the preceding quarter. The drop was due to a big pullback in company marketing. And those subscribers came at a price: nearly $290 spent to acquire each one in advertising and other costs. 

And worst of all: Comcast, on a roll with its "triple play" cable-Internet-phone package, outpaced Vonage in the quarter to become the country's top Internet calling service provider.
 
Silicon Alley Insider is questioning whether Vonage will shut down. Giga Om says it's only a matter of time:
"By better fiscal management and with enough cash in the bank, it can prolong the agony, but ultimately something dramatic needs to happen for the company to dig itself out of this hole."
At least Vonage has a solid base -- 2.45 million subscriber lines. And getting those customers cost a lot of money. The company could be acquired just for its user rolls alone.
Comments

 

I've had Vonage for about 3 years. In the beginning I've had a few dropped calls, but that improved before I had time to consider if it was worth the inconvienience.

Vonage has problems with some "Baby Bell" phone companies. If I call the house next door, I get just enough of a delay to make it difficult to talk to someone who doesn't know to anticipate the delay, so I just use my cell phone to talk to everyone in my local land line exchange. I use Roadrunner for a service provider (formerly Adelphia in this area).

Vonage is cheaper than using call phones or land lines. In the Bush economy, Vonage provides a reasonable level of service for a lot less money than my other options here. I'll stick with them because I can save a bunch of money by doing so. It's well worth the minor inconvieniences.

Vonage's IPO was a joke. They sent me a prospectus and as a customer I was offered Vonage stock at about $17.00 a share. Now it's trading at what, 96 cents a share.

To sum it up, I see Vonage as a great phone service and a lousy investment.

I have Vonage for over two years, and it is the best thing that's out there for your money right now.  I have no problems with voice quality and it is still better than

comcast voice.  

Vonage has been integril to my growing business.  While it hasn't been perfect, it has improved dramatically.  Compared to similiar services through ATT I'm paying only a fraction of the cost for two lines and a fax line (Under $80!)  I hope they stick it out.  

I have had vonage for five years. I have not had any problems with them during this time. I have moved to three different states during that time, and kept my same phone number the whole time. I hope they dont go out of busines.

vonage is a modern day pirate.they dont have thier own  network to deliver thier services,the cable co.has to foot the bill to build and maintain thier networks.it is possible to have issues with vontage and not substanaly interfer with your internet.so why would the cable co.spend money repairing a product that is thier rivel.sort of like riding to work with someone and not helping with the cost.

I've had Vonage for several years now and have had no trouble with their service. Any interruptions were due to my cable company. My wife calls her brother in Italy for no extra cost. I've called to Ireland for no extra cost. We have a "virtual phone number" in Wisconsin that rings in Virginia.  

Ihave had Vonage for a few years now.  I have had some minor issues, but nothing that would possibly make me quit Vonage.  I figure that with the price they charge, I'm not going to complain.  Besides, I had issues with the other companies as well, and their customer service wasn't any better.  They have been a breath of fresh air!!:-)

I cancelled my vonage service today after 6 years. Over the last several months I have had frequent problems with loss of (mostly outgoing) audio. I called technical support several times and was finally told that I needed a new telephone adapter. I was led to believe that I would not be charged for the device if I returned the old device within one month. Neverthelss, in May 2009 I was charged $32.48 on my vonage account (after receiving a $49.99 rebate on the old device). The new device did not solve my audio issues. After yet another call to technical support, a "test call" was accomplished and this, of course, went off without a hitch. I continued to have loss of audio so I called again and was eventually transferred to "advanced technical support" This time, the audio went out in both directions during the call! The vonage technical staffer called me back on my cell and eventually admitted there was no solution to my problem. I asked to be transferred to accounts and asked to discontinue service. I was told that I had just paid for service up until July 24 and then I would have free call-forwarding through August 23. I was told I would need to call on August 23. I did not understand why I needed to call back but, after more than one hour on the phone I was ready to hang up. The next day I was emailed a customer satisfaction survey which thanked me for deciding to "continue my service." I called accounts and was again told that I could not cancel my service until July. I was promised that "notes would be put in the system" indicating that my account should be cancelled in July. I called the next day after seeing an additional charge of $75.71 on my account. I was told this was because they never received the old adapter. I indicated I thought it preposterous and unfair that I would be charged for a device which I had been told was needed to resolve my audio problems and which did not help in the least. I again insisted I wanted to cancel my account. I was eventually transferred to another representative and after several minutes of heated discussion on my part was offerred a refund on the new adapter if I would return it (which I did about an hour later). I again asked to discontinue my account and after placing me on hold for several minutes the representative came back on the line and agreed to cancel my service, which was immediately done. She repeatedly refused my request for a refund for the remaining month of service for which I had been charged. Later that day, I received an email notification that I would be chaged a disonnect fee of $39.99 (for disconnecting a service which did not provide its promised function!) I understand the internet issues that apparently are at the root of my audio issues are out of vonage's control, but as a loyal customer for more than 6 years, I would expect that the technical staff would have told me this months ago before I wasted more time, and lost countless more calls, not to mention paying for a device I did not want or need. I am advising friends and colleagues to give this company a wide berth.

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