Vonage on verge of patent fix

Vonage is close to coming up with a technical fix that could solve its patent infringement problems, chief executive Jeffrey Citron said during the company's quarterly earnings conference call on Thursday.

In March, a jury in Virginia found Vonage had infringed on three patents held by Verizon Communications. Vonage is currently appealing the decision.

Citron said the new technology, which will provide a workaround to the first two patents that describe how IP addresses are mapped to telephone numbers, can be installed through software downloads. The fixes are not expected to cost Vonage much to implement, Citron said. And the installation will require minimal effort from customers. He also said the company is working on a solution for the third patent, which deals with the transmission of voice over IP calls over Wi-Fi networks.

Vonage's net loss for the first quarter was $72m, compared with a loss of $85m in the same quarter a year earlier. The company was not publicly traded in the year-earlier quarter. Revenue was up 64 percent to $196m from $119.7m a year ago.

But the company's legal troubles may have affected its ability to sign up new customers. In the first quarter, the company signed up 166,000 new subscribers. During the same quarter a year ago, it signed up 328,000 new subscribers.

Vonage, which spent an average of $275 (£139) to acquire each new customer in the quarter, said that its churn rate, or the rate at which customers drop its service, rose to 2.4 percent, compared with 2.3 percent for the previous quarter.

In April, Vonage said it would cut its advertising budget by $110m to $310m for 2007. It also plans to reduce its workforce by 10 percent to help curb spending. The company's chief executive Michael Snyder also stepped down last month. Citron, who is acting as interim chief executive, said during the conference call that the company will update investors on its next conference call regarding its chief executive search.