Vonage Shares Fall After Court Ruling

Shares in Vonage fell as much as 11% on Monday after a judge said it could not add new customers due to a finding that it infringed Verizon Communications'patents for making phone calls over the Internet.

Vonage shares dropped on investor uncertainty about the company, even though it received an emergency stay on the ban from an appeals court until that court can hear its request for a permanent stay. Earlier the stock traded as far down as $2.88, a new low.

"Although it is possible that Vonage could win its appeal, it is also entirely possible that the company's appeal is denied or ultimately lost," said Deutsche Bank analyst Greg Miller in a note to clients.

"In our opinion, absent a functioning 'work around' or a reversal of the District Court's ruling, we cannot envision how Vonage continues operations unimpeded," he added.

Miller said "it is virtually impossible to determine an appropriate valuation" on the stock.

Vonage went public in May 2006 at $17 per share, implying a market value of almost $2.7 billion. The shares have declined steadily since the initial public offering and closed Thursday at $3.37, with a market value of $522 million.