Vonage Holdings Corp. (NYSE: VG), which has been found to have infringed on three Verizon patents, warned investors that its legal woes could push the company into bankruptcy. Investors are heading for the hills, sending the stock down 7%.
Could this be a buying opportunity? Successful investors often go against the grain. With all the negative sentiment surrounding the company, whose shares have plunged 80 percent since going public last year, there just may be value here.
This stock, though, isn't for everybody. Vonage's warnings, which is part of the 10-K that the company filed with the SEC yesterday, says that intellectual property litigation, especially our ongoing patent litigation with Verizon, if determined against us, could... lead to the bankruptcy or liquidation of the company."
With a current market cap of half a billion dollars and the potential of court-imposed limitations on its ability to add new customers, Vonage is about as contrarian of an investment as it gets. And while I consider myself a contrarian, I definitely don't have the guts to touch this one.
But people make money in the stock market by buying low and selling high. For those who are game enough to buy Vonage's stock. I wish you the best of luck. You'll need it.
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Reader Comments (Page 1 of 1)
4-18-2007 @ 2:38PM
The_Village_Idiot said...
No, Vonage will shutdown within 2 years.
4-19-2007 @ 5:11AM
charlie said...
If you want to buy vontage maybe i can sell you some worldcom ...real cheap. ..get it while its hot.
4-19-2007 @ 5:11AM
ak said...
Verizon is going to get spanked very, very hard for filing their patent suit in bad faith: They quoted documents with prior art in other patents filed at the same time. The VZ patents are devoid of merit. The lawsuit was barratry, and the judge needs to be impeached for incompetence and negligent disregard for the public interest. Whether VG can survive until the patents are invalidated, I do not know. That could happen quickly or slowly, depending on how clever they are. Meanwhile, they can just pay the stupid 5.5% royalty, and continue to grow their customer base.