Vonage: Litigation Could Bankrupt Us

The news continues to get worse for Vonage, which last month lost a major patent infringement lawsuit filed by Verizon Wireless.

In a filing with the Securities and Exchange Commission Tuesday, the VoIP provider acknowledged for the first time publicly that its legal problems could seriously harm the company's financial health.

Chief among these concerns is the specter of bankruptcy, Vonage says. Among the possible risks are the loss of customers, distribution channels, and damage to the brand, which could lead to its delisting from the NYSE and bankruptcy and litigation.

"The defense of any lawsuit could result in time-consuming and expensive litigation, regardless of the merits of such claims," the company said in the filing.

So far, the company has been ordered to pay $58 million and royalties to Verizon as part of a March judgment against it. In addition, it was banned from signing up new customers, although it successfully won a stay pending its appeal.

Vonage's latest problems dragged its already waning stock price even lower: in early morning Wednesday trading, the stock plummeted more than 8 percent to $3.04. It is already down more than 80 percent since its IPO last year.