Shares of Internet telephony company Vonage Holdings Group (NASDAQ: VG) tumbled this morning following a downgrade from Citigroup.
Last Friday a federal judge issued a permanent injunction against the company, barring the firm from using technology patented by Verizon Communications (NYSE: VZ). Though the court did issue a temporary stay on the ruling as Vonage appeals, Citigroup believes the developments may increase risk surrounding the company.
We believe the risk to the company's profitability has increased, regardless of the stay, as Vonage may increasingly need to pay or invest more for intellectual property to maintain its full functionality and service delivery to its customers, Citigroup said.
The bank downgraded the company to a Sell rating, from a Hold, sending shares down 4.79 percent in mid-day trading, losing 16 cents to hit $3.22 on the Nasdaq Stock Market.
In a statement yesterday, executives from Vonage reiterated its confidence going forward.
Anyone whoâ€™s counting Vonage out is making a huge mistake, CEO Mike Snyder said.