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11/8/2007
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Vonage Reports A Big Loss, But Settles Major Patent Case With AT&T

Vonage reported a loss of $161.8 million for its third quarter, but continued to add new subscribers and predicted it will have an operating profit next year.

Vonage reported a loss of $161.8 million for its third quarter, more than double its losses a year ago, but the VoIP provider said it continued to add subscribers and predicted it will have an operating profit next year.

The company also reported it has settled another patent infringement law suits -- this one with AT&T -- that have plagued the start-up company for months. Earlier Vonage settled suits with Verizon Communications and Sprint for a total reaching as much as $200 million. The agreement with AT&T calls for Vonage to pay the telecom company $39 million over five years, Vonage reported.

"The parties will work diligently to finalize the specific terms of the settlement agreement," according to Vonage. "AT&T would agree to dismiss the lawsuit against Vonage, and Vonage would agree to dismiss a case against AT&T, which is also outstanding."

Noting that its average monthly revenue per line increased 2 % to $28.24 from the year-earlier quarter, Vonage said its quarterly revenue grew to $211 million from $162 million. The company lost $62 million in its 2006 third quarter.

"We are executing against our strategy to fix the fundamentals of our business," said Vonage chairman Jeffrey Citron. "We are acquiring customers more effectively and running the business at an improved cost structure."

Vonage said its subscriber base passed the 2.5 million mark for the first time as it added 78,000 net new subscriber lines during the quarter; positive cash from operations was also generated in the third quarter.

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