Today was one of those directionless trading days after so many gains that there was absolutely no way to know if the markets would be up or down until the last few seconds of the day. We had a very strong durable goods reading for July and even home sales figures remained high.

Here were today's closing bell levels:

Dow 9,543.52 +4.23 (0.04%)
S&P 500 1,028.12 +0.12 (0.01%)
Nasdaq 2,024.43 +0.20 (0.01%)

Top Analyst Calls
Most Unusual Volume

Vonage Holdings Corp. (NYSE: VG) continues to pay big bucks to settle patent infringement cases.

The Internet phone company today settled its long-running dispute with Verizon Communications Inc. (NYSE: VZ). In March, a jury awarded Verzion $58 million and issued an injunction that basically would have forced Vonage out of business. That decision was upheld by the U.S. Court of Appeals for the Federal Circuit.

Vonage will pay Verizon up to $117.5 million, depending on the outcome of pending appeals, the Holmdel, NJ-based company said in a statement. It will also give $2.5 million to charity. This settlement isn't surprising. Patent litigation is really expensive and takes forever to wind its way through the courts which is why companies are eager to settle these cases before trial.

Earlier this month, Vonage settled a patent dispute with Sprint Nextel Corp. (NYSE: S) for $80 million. It faces a separate legal action from AT&T Inc. (NYSE: T). With all of these huge companies wanting a piece of it, it's a wonder that Vonage is still standing.

Absent the patent issues, Vonage's future remains bleak. It competes to offer what is basically a commodity service against much larger rivals. Once these patent cases are settled, my suspicion is that one of them will try to snap up Vonage while the stock continues to trade well-under its $17 IPO price. It closed today at $1.53.

Vonage Holdings Corp. (NYSE: VG) has escaped the hangman's noose for now, settling a patent dispute with Sprint Nextel Corp. (NYSE: S) for $80 million that threatened to sink the company. Shares of the Internet phone service provider surged on the announcement.

Hold the applause for a second.

Remember, the Holmdel, NJ company recently was ordered to pay $58 million with Verizon Communications Inc. (NYSE: VZ) to settle another paent dispute. Though the company say it can "work around" the disputed patents, it has other serious problems.

The company is locked in a competitive struggle against much bigger competitors such as Verizon and Comcast Corp. (NASDAQ: CMCSA) that over time it will lose even as more telephone service migrates to the Internet. Yes, I know Vonage has a cadre of customers who are just crazy about it and even liked those annoying commercials that thankfully have disappeared but I don't see how the company will survive over the long term.

Yesterday, eBay Inc. (NASDAQ: EBAY) announced that the co-founder and chief executive of its Skype division, Niklas Zennstrom , was stepping down, and that eBay would take $1.43 billion in charges for the internet phone division. Of that, $900 million will be a write-down in the value of Skype, what's called an impairment charge. The rest, $530 million, is payment for certain shareholders to settle future obligations.

Well, well, well. It seems that eBay had finally caught on. Hadn't investors been saying the $2.6 billion Skype acquisition in October 2005 was overvalued from all along?

While Skype was profitable the last two quarters, its contribution to eBay's top line was abysmal considering it was one of three legs eBay was counting on in its Power of Three strategy. The other two being the online auction business, or market place, and PayPal, the online payment service. For 2006, Skype contributed $194 million to eBay's near $6 billion revenue, that's about 3.2%. To give you an idea, market place contributed $4.3 billion and PayPal $1.4 billion. In the first six months of 2007, Skype did better and contributed $168 million or 4.7% to eBay's total revenue of $3.6 billion. Better, and certainly growing nicely (over 100% year-over-year growth), but still a far cry from what it should be considering the price paid.

The New York Times [registration required] reports that Pudding Media is offering a Web phone service that will listen to your phone calls and display advertisements on your computer screen on the topic of your conversation. In exchange, your calls will be "free."

A conversation about movies, for example, will display movie reviews and ads for new films that the caller will see during the conversation. Pudding Media is working on a way to e-mail the ads and other content to the person on the other end of the call, or to show it on that person's cellphone screen.

The government currently can spy on your phone calls, your Internet activity, and your e-mail. So would you really mind Pudding Media spying on you so it can send you spam while you talk on the phone? While I can see the appeal of this strategy to advertisers, I am confident that people looking for free calls without the spying and spam will be able to do just fine using eBay's (NASDAQ: EBAY) Skype.

Why not visit Pudding Media's site and give their spymasters a piece of your mind?

Peter Cohan is president of Peter S. Cohan & Associates,. He also teaches management at Babson College and edits The Cohan Letter.

When eBay (NASDAQ: EBAY) bought Skype last year, the company's CEO, Meg Whitman, argued that the $2.6 billion purchase made sense because of synergies. Most importantly, the estimation that eBay activity would increase as buyers and sellers could communicate via Skype.

But according to Breakingviews, Skype has "failed to live up to" this estimation. As a result, the synergies between Sykpe and eBay remain largely unnoticed or nonexistent.

Breakingviews makes an interesting point -- Skype would be an unbelievably useful tool for social networking websites. Both MySpace and Facebook are going to have huge money behind them in the next few years. MySpace, with the support of News Corp (NYSE: NWS), has potential as a buyer. However, Facebook is the better bet. With the company allegedly preparing for an IPO, Facebook's renegade founder Mark Zuckerburg will soon have the capital to acquire Skype if he so desires.

eBay and Skype don't really have any legitimate synergies. Auction activity hasn't been increasing due to the "Skype safety" that Whitman advocated at the time of purchase. But Skype remains a very valuable company, especially to a service that could actually integrate Skype effectively such as Facebook or MySpace.

Over the past couple years, VOIP phone companies have been big spenders for online advertising. It was the right target market – but not cheap. Competitors essentially bid up the prices.

Well, things may moderate. According to a report in the Wall Street Journal [a paid service] and The New York Times, VOIP provider, SunRocket, has shut down its operations.

Funny enough, if you surf the Net, you will still see lots of SunRocket ads. So, I guess the company still needs to take some cleanup actions.

The firm got its start about three years ago and quickly attracted venture capital from firms like Doll Capital Management, BlueRun Ventures and the Mayfield Fund (which, of course, will now have a write off).

Even at that time, things looked dicey for VOIP providers. Vonage Holdings Corp. (NYSE: VG) had a strong presence in the market and there was lots of competition from traditional players, like Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T). Of course, there was competition from cable players.

What's more, it appears there are outages at SunRocket, which is certainly a big hassle for customers.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

This is the question raised by an SEC filing by Vonage Holdings Corp. (NYSE: VG) yesterday. According to Reuters, the risks of its ongoing litigation with Verizon Communications Inc. (NYSE: VZ) They include the possible interruption of service, an inability to repay its debt and a decline in its stock that could lead to the delisting from the New York Stock Exchange.

As I posted last week, Vonage had only $154 million in cash at the end of the year. And it has $278 million in long-term debt which needs to be repaid. I would not want to be the lender. Nor would I be holding the stock or using Vonage's service.

It's time to get a backup plan in place for service. And if you hold the stock, get out now.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Verizon or Vonage.

Time Warner had a good week, opening at $16.50 on Moday 28 August, and closing on Friday 1 September at $16.76, with gains on all five days. Lots happening in the various dividions of the Time Warner stable. Just in time for the start of the new school year, AOL launched Study Buddy, a search engine that includes only homework help and information sites pre-approved by educators in order to keep inappropriate internet material away from kids. Despite its avowed attempt to recoup subscription fees through increased online advertising, AOL permits only limited advertising on the Study Budddy site in order not to be accused of trying to manipulate or explot children as consumers.

Marketing to older students, AOL launched Music Now, offering access to 2.5 million audio tracks and thousands of music videos. Also included in this product is access to some XM Radio channels. Alas, according to BusinessWeek online, Apple's strong brand and enormous market share will not be threatened by this latest attempt at direct competition against the popularity and ubiquity of iPods and iTunes. If more than mildly successful, however, AOL's Music Now could cause Apple to offer a more flexible pricing scheme. Monopoly bad, competition good. And speaking of trying to strike a blow for competition, AOL announced it will continue to support the Dojo JavaScript toolkit in order to spread adoption of it in the ever growing open source community. AOL already uses Dojo in AIM Pages.

Turner Broadcasting System's TNT will again host Film Life's Black Movie Awards celebrating achievements in black cinema. The awards gala in Los Angeles will be aired on Wednesday, October 18 at 10 P.M. only on TNT. 2006 awardees for achievement in black cinema include Cicely Tyson and Laurence Fishburne. On Sunday, September 10, Turner Classic Movies will honor the legendary actor Glenn Ford who died recently at age 90. Six out of Ford's close to 100 movies will be aired.

Time Warner Cable announced it has signed up its first 75,000 digital phone service customers in the Kansas City area and expects the figure to climb much higher at Time Warner takes on AT&T. While cutomers may increasingly opt for digital phone service, AOL has cut off its TotalTalk internet-phone service due to lack of consumer interest. Instead, AOL will concentrate on marketing its AIM Phoneline service in which computers can dial up other computers for free and receive incoming cell phone calls.