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Vonage to 'Continue the Fight'

Shares rise after the first-quarter loss narrows.

Vonage (VG) - Get Vonage Holdings Corp. Report 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

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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.

"We have battled through an extremely difficult quarter and will continue the fight in the courtroom. While the patent litigation has challenged our business, it has not distracted our focus," founder and acting CEO Jeff Citron said in a press release.

Looking ahead, the company said that due to the legal uncertainty, it "will not comment on previously issued guidance."

Vonage shares rose a quarter, or 8%, to $3.30 in morning trading Thursday.