Vonage Holdings announced Thursday that CEO Michael Snyder resigned and that it plans to lay off 10% of employees and to reduce marketing expenses by $110 million on the eve of a federal appeals court hearing in its legal fight with Verizon Communications.
The Holmdel, N.J.-based Internet-phone company announced that chairman Jeffrey A. Citron was named interim CEO. Vonage said it will initiate a search for a new CEO immediately.
Vonage also announced plans to slash marketing expenses by $110 million, to about $310 million for 2007, saying it expects to save $30 million through the remainder of the year through “consolidation of operations and work-force reduction.” The company said it would eliminate about 180 jobs, or 10% of its work force of 1,800.
In a Securities and Exchange Commission filing Thursday, Vonage said it anticipates incurring a restructuring charge of approximately $5 million for the second quarter of 2007 for onetime employee-termination benefits.
Vonage announced preliminary financial results for the quarter ended March 31. The company estimated quarterly revenue at $195 million, compared with $119 million for the same period in 2006, and said it added 332,000 subscribers in the first quarter but lost about 166,000.
On Friday, Verizon is expected to file a brief with the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., opposing Vonage’s request for a stay on an injunction that a federal judge issued last week in the telco’s patent-infringement case.
The injunction, which was set to go into effect on April 12, would prevent Vonage from signing up new customers but allow it to service existing ones.
A jury in the case in March ruled that Vonage must pay Verizon $58 million in damages plus a percentage of future revenues, for infringing on the Verizon patents.
Vonage shares closed at $3 apiece on the NASDAQ Exchange Wednesday. The company went public last May at an initial price of $17 per share.
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