Vonage Execution Stayed

Shares jump 47% on news of a favorable court decision.
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Vonage (VG) - Get Report shares spiked 47% on news that the company won't be prohibited from seeking new customers.

Shares in the Holmdel, N.J., Internet phone service jumped just ahead of a midafternoon trading halt called to disseminate news of the federal appeals court ruling, and continued their surge after trading resumed.

Vonage had been temporarily enjoined earlier this spring from signing up new customers as a result of an infringement finding in a dispute with

Verizon

(VZ) - Get Report

. Vonage is appealing the infringement finding, which slapped a $58 million penalty on the company and forces it to pay 5.5% of revenue to Verizon.

Wall Street had speculated that a permanent injunction against getting new customers could drive Vonage into bankruptcy, and the company suggested as much in a regulatory filing last week. Vonage also replaced CEO Mike Snyder earlier this month, charging founder Jeffrey Citron with righting the listing ship.

But the injunction against bringing in new business -- which had been temporarily stayed pending the results of the hearing this week -- was permanently stayed Tuesday, Vonage said.

"We thank the appellate court for its thoughtful consideration of the merits of our case," said Citron. "It's business as usual for us."

Vonage shares, which have lost more than three-quarters of their value since they came public last May, rocketed 87 cents at midafternoon to $3.76 ahead of the trading halt. After trading resumed, shares leapt another 51 cents to $4.26.