Vonage Says Patent Suits Could Lead to Bankruptcy

VONAGE SAYS PATENT SUITS COULD LEAD TO BANKRUPTCY
[SOURCE: Wall Street Journal, AUTHOR: Amol Sharma amol.sharma@wsj.com]
Vonage says bankruptcy is among the potential risks from its continuing patent litigation with phone giant Verizon Communications Inc., as the Internet calling start-up's problems deepen. In a filing with Securities and Exchange Commission, Vonage listed problems it could face because of the Verizon litigation and other patent lawsuits, including loss of customers and distribution channels, substantial employee layoffs, a continued decline in its share price and the inability to meet its debt obligations, which could lead to a bankruptcy filing. In court, Vonage has painted a gloomy portrait of how an injunction would affect its business. The filing provides the company's most detailed explanation to investors of just how high the stakes are. The challenge for Vonage is to be forthright with Wall Street while reassuring its customers.
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