Vonage: Now, There's No Work-Around?

Posted by: Olga Kharif on April 16, 2007

Vonage has been sending out mixed messages lately. For weeks, the company has promised investors that it’s developing a work-around around Verizon’s technology, which courts said Vonage had infringed. But in its court filing on Friday, the company revealed that it has, in fact, come up with no work-around — and that development of one could take months.

These revelations took me by surprise, considering that only the day before, interim CEO Jeffrey Citron said, in a conference call with analysts, that he will update the Street on progress with the work-around in May. I assumed the work-around was under way. So did a lot of people on Wall Street. That appears not to have been the case.

Sure, the Friday filing may simply be part of Vonage’s negotiating tactics, designed to obtain a permanent stay to a court order, requesting that the service stops recruiting new customers. Yet, I find the ying-yang of statements coming out of Vonage regarding the work-around troubling: It threatens to shake up the Street’s trust in what the company says and does.

Yes, right now, Vonage doesn’t have anything good to share. But other companies have been in this situation – and survived because they chose honesty in dealing with the Street. Nortel is a prime example. Under its new leadership, even when Nortel had had bad news to share in the past few years, the Street's confidence in the company rose simply because the company's leadership were perceived as sincere, and willing to share what's really going on with the company. Vonage needs to start doing the same.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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