Vonage Fighting on Two Fronts

Shares of Vonage are trading at their lowest levels since going public nearly a year ago, as the broadband telephone service provider faces an injunction preventing it from signing up new customers, due to a patent infringement case against Verizon. Meanwhile, rival Charter Comm. is not wasting any time trying to lure Vonage customers amid the uncertainty. A U.S. federal appeals court will hear Vonage's case for a permanent stay of the injunction on April 24. Vonage was issued a temporary stay last Friday, and on Monday it said service to its customers will continue indefinitely. Vonage will pay a quarterly royalty of 5.5% into escrow during its appeal, which it said it believes will succeed. Coverage of Vonage's woes by GigaOM suggests it is an attractive takeover target for cable operators, even at $250-$300 per each of Vonage's 2.2 million subscribers -- a premium to its current market capitalization of about $465 million -- since it would still be cheaper than customer acquisition costs associated with an advertising and sign-up campaign.

Sources: CNET News.com, GigaOM, 24/7 Wall St., Press release, Light Reading, Bloomberg
Commentary: Vonage: Court Grants Stay On Order Barring Signing Up New Users • Comcast Set To Pass Vonage As Top VoIP Provider • Does Vonage Have a Future?
Stocks/ETFs to watch: Vonage Holdings (VG), Verizon Communications (VZ), Charter Communications (CHTR), Comcast (CMCSA)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.