IP Democracy: Vonage Death Vigil: Sprint Deal Unlikely

Vonage has been a trainwreck for almost a year, starting around the time it went public. The VoIP provider’s botched IPO sparked massive lawsuits and customer defections. Subscriber growth has otherwise precipitously dropped and it looks like Vonage won’t survive its bone-crushing patent infringement lawsuit loss to Verizon.

Lost among the headlines regarding Vonage’s lawsuit loss to Verizon is the fact that the company is embroiled in three other infringement lawsuits — one filed by Sprint in October 2005, one filed by a small voice mail tech provider called Klausner Technologies in July 2006 and one filed by a VoIP tech provider called Web Telephony in March 2007. On top of that, Vonage is coping with those class-action lawsuits stemming from its IPO.

What’s left for Vonage? Well, the best exit for Vonage at this point is for a rival to purchase the company’s customer base. Rumors floated earlier this week that Sprint-Nextel might be in talks to do precisely that, but according to Business Week’s Olga Kharif, that’s probably not going to happen. Sprint Nextel is facing enough challenges without taking on Vonage’s woes, even if it could buy Vonage’s subscribers at bargain basement prices.

A more likely outcome is bankruptcy, the specter of which Vonage raised yesterday in its official 10-K filing with the SEC.

Posted by Cynthia Brumfield on April 18, 2007 10:16 AM to IP Democracy