Vonage to 'Continue the Fight'

Vonage (VG Quote - Cramer on VG - Stock Picks) shares jumped Thursday as the Internet phone company posted a narrower first-quarter loss.

The Holmdel, N.J., Internet calling service lost $72 million, or 47 cents a share, in the quarter ended March 31. That compares with a loss of $117 million in the prior quarter and $85 million in the year-ago period.

Analysts had expected a 42-cent loss, according to Reuters Research.

First-quarter sales were $196 million, up from $181 million in the prior quarter and well above the $120 million level last year. The revenue tally was in line with analysts' projections.

But Vonage saw its net new subscriber growth rate drop by half as customer defections, or churn, increased to 2.4% a month from 2.1% a year ago.

Vonage is appealing a devastating patent infringement verdict in late March. If upheld, the ruling threatens to block the company from signing up new customers and force Vonage to pay Verizon (VZ Quote - Cramer on VZ - Stock Picks) a 5.5% royalty rate for the use of its voice over the Internet technology.

With the patent ruling coming at the end of the first quarter, the full impact of the decision and ongoing appeal wasn't evident. But early signs aren't promising. The number of net new users increased by 165,646 in the first quarter ended in March. That is down from 166,267 in the fourth quarter and half the 328,279 new signups a year ago.

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