Vonage View Shifts

Believe it or not, some people are now seeing some upside in Vonage (VG Quote - Cramer on VG - Stock Picks).

The Holmdel, N.J., voice-over-the-Net telco fired CEO Mike Snyder Thursday. Vonage says it will cut about 10% of its staff in an effort to balance costs in the face of an expensive and potentially devastating legal battle with Verizon (VZ Quote - Cramer on VZ - Stock Picks).

The news continues a long streak of unhappy developments at Vonage. The struggling phone company has delivered investors nothing but punishment since its IPO. Shares have dropped 80% since last May's $531 million debut.

Yet despite continued risks, some money managers now see room for a little reward.

"The assumption is that it should be at $0, but I think people are overreacting," says one New York hedge fund manager who was looking to buying the stock.

Clearly there is some support for the notion that Vonage's straits aren't as dire as suspected. The stock rose 11% Thursday in the wake of the shakeup.

It has been a brutal few weeks for Vonage on the legal front. Last month, a jury ruled that Vonage had violated three patents related to voice-over-Internet-protocol technology. Late last week, a judge granted an injunction preventing Vonage from signing up new customers. Vonage got an immediate emergency stay on that injunction.

On Friday, Verizon is expected to file a brief with the patent court; Vonage has until Tuesday to file its own brief. Then, on April 24, the federal patent court will start a hearing on whether to uphold the stay throughout the appeal process.

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