April 4th, 2007
Prediction: specter of Verizon judgment will cut Vonage's advertising, marketing budget
Fellow VoIP blogger Andy Abramson notes a Marketwatch report that Vonage has delayed the filing of their annual report because of extra time needed to calculate the financial effects of the recent patent decision awarding Verizon $58 million because of findings Vonage has infringed on three of Verizon's VoIP-enabling patents.
While I disagree a bit with Andy that the delay is a direct sign of trouble, I perceive that as a result of the judgment, Vonage may be thinking of ways to conserve cash in case they have to pony up.
Considering Vonage's business model, two of the methods I believe they will use to conserve is to cut down some on advertising expenses, and to reduce the commission they pay to affiliates for new accounts.
This would go against Vonage's track record of spending money to make money, but when you have a judgment over your head, that can turn even spendthrift companies (or individuals for that matter) into parsimonious types.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
