Vonage posts narrower losses for the quarter

Internet telephone company Vonage Holdings reported a much reduced loss for the second quarter as it scaled back marketing, but it also saw a drastic drop in new subscribers, an Associated Press report said.

The Associated Press report said the drop in recruitment means that Vonage is no longer the country's largest provider of Internet-based telephone service, a field it pioneered. Cable company Comcast reported 3 million digital phone subscribers at the end of the second quarter, surpassing Vonage's 2.45 million, an increase of just 57,000 lines from the first quarter.

The report said the company is struggling in court with another old-line telecommunications company, Verizon Communications. In March, a jury found that Vonage infringed on three Verizon patents. The judge barred Vonage from signing up new customers, but that decision has been stayed while an appeals court considers it.

Vonage said it had 'substantially completed the deployment of workarounds' for two of the patents, and has developed a workaround for the third one.

Excluding one-time charges, Vonage lost $18 million substantially better than the average analyst estimate compiled by Thomson Financial.

Revenue came to $206 million, $2 million short of analyst expectations but up 43% from $144 million in the second quarter of 2006.

Vonage, which once blanketed the Internet with its banner ads, spent $68 million on marketing in the second quarter, down from $91 million in the first quarter. However, it got less for its money: the market costing per added subscriber rose by $14 to $287.