While still fighting VZ's patent suit, Vonage has decided to just pay Sprint for its infringement of patents. The court ruled in favor of Sprint over Vonage and awarded $69.5 million plus 5% royalties. Vonage has agreed to pay $80M. According to Telecomweb, that "includes $35 million for past use of Sprint-Nextel technology, $40 million for a fully paid future license to the Sprint-Nextel VoP patent portfolio and $5 million in prepayment for services."
The shocking part is where will the money come from?
Telecomweb did a napkin analysis of the Vonage financial picture:
Even though on paper the company had $656.6 million in assets as of June 30 (notably down a tad more than $100 million in just 180 days), it had $564.3 million in total liabilities. And that was before the Sprint-Nextel settlement... As of its latest quarterly report to the SEC, the VoIP carrier had $144.8 million in cash and equivalents, and $132 million in marketable securities as of June 30 plus $66 million in restricted cash set aside to pay off Verizon if necessary. The numbers reflect that fact Vonage has now burned through most of the $531 million it raised in its IPO as well as through most of the other cash it got from venture capitalists. Indeed, as of June 30, its accumulated deficit topped $827 million."Looks like those folks that moved from the SunRocket crash may have to move again by January 2008. The costs to provide unlimited VoIP service keep increasing, while the providers hold steady with the plan to acquire customers with the chant: "We are the cheapest!"