At the same time that embattled VoIP provider Vonage attempts to reorganize and cut costs during the company's darkest hour, rumors are beginning to fly that an acquisition may be imminent, and at the top of the list of potential buyers is none other than Sprint-Nextel. You see, not only does Vonage need to litigate its way out of the Verizon mess, it's facing yet another potential setback in September (if it even lasts that long) when an infringement lawsuit brought by Sprint is scheduled to begin. So even if Vonage manages to to fight off the impending permanent injunction, Sprint is waiting in line to take a bite as well, and now Light Reading is reporting that company execs may decide that the best way to settle this dispute is to simply sell Sprint the keys to the office. Now it's pretty obvious why Vonage would want to cash out and dump its mess on another firm, but what does Sprint have to gain from such a deal? It's not clear why the wireless carrier would want to get into the internet telephony game at this point, and even if it did, the court may soon rule that in effect, Vonage doesn't even have anything worth selling -- except maybe its customer list. Obviously we'll be keeping our eye on this, because we have to admit, Vonage is a lot more fun to cover now than it used to be.

Will other VOIP carriers suffer the same fate as did Vonage?

NEW YORK (Reuters) - Shares of Vonage Holdings Corp. (NYSE:VG - News) dropped 6 percent on Wednesday after it warned in a regulatory filing of a risk of bankruptcy due to legal woes stemming from a court's finding that it infringed on Verizon Communications Inc.'s (NYSE:VZ - News) patents.

The Internet phone company also cited the risk of service interruptions, an inability to repay its debt and a decline in its stock that could lead to the delisting from the New York Stock Exchange. The warning was part of its annual report filed with the U.S. Securities and Exchange Commission on Tuesday.

Vonage shares fell 20 cents to $3.11 in morning NYSE trade. They have fallen around 82 percent from an initial public offering price of $17 last year.

The filing came after Vonage was ordered last month to pay $58 million plus royalties on future sales to Verizon because of a finding that it infringed on three patents owned by Verizon.

The court also barred Vonage from adding new customers, while it appealed the decision.

An appeals court allowed it to continue signing up new customers ahead of a hearing to consider a permanent stay on the bar on April 24.

Vonage Chief Executive Michael Snyder stepped down last week as the company said it planned to cut jobs and expenses by $30 million in 2007.

NEW YORK (Reuters) - Internet phone company Vonage Holdings Corp. (NYSE:VG - News) said on Tuesday a federal appeals court permanently stayed a lower court order that barred it from signing up new customers.

A federal district court on April 6 said Vonage could not add new customers because of a finding that it infringed patents held by Verizon Communications Inc. (NYSE:VZ - News) for making phone calls over the Internet.

The latest ruling came about two hours after the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. heard arguments from lawyers representing Vonage and Verizon.

Vonage shares jumped nearly 49 percent after the announcement of the decision.

Each side answered questions for about 45 minutes. However, the judges gave no indication at the hearing which way they would rule. A court clerk later confirmed that the stay had been granted by the court.

"In layman's terms, it means business as usual," said Brooke Schulz, a spokeswoman for Vonage.

Vonage said it will continue to serve existing customers and is putting funds into a reserve as required by the court.

The stock soared to $4.42 on the New York Stock Exchange, after earlier sliding to a 52-week low of $2.83.

NEW YORK (Reuters) -- Internet phone company Vonage Holdings Corp. said on Tuesday a federal appeals court permanently stayed a lower court order that barred it from signing up new customers sending the stock up almost 50 percent before its shares eased back to a 30 percent gain in mid-afternoon trade on the New York Stock Exchange.

A federal district court on April 6 said Vonage (Charts) could not add new customers because of a finding that it infringed patents held by Verizon Communications Inc. (Charts, Fortune 500) for making phone calls over the Internet.

The latest ruling came about two hours after the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., heard arguments from lawyers representing Vonage and Verizon.

Vonage shares jumped nearly 49 percent after the announcement of the decision.

Each side answered questions for about 45 minutes. However, the judges gave no indication at the hearing which way they would rule. A court clerk later confirmed that the stay had been granted by the court.

"In layman's terms, it means business as usual," said Brooke Schulz, a spokeswoman for Vonage.

Vonage said it will continue to serve existing customers and is putting funds into a reserve as required by the court. The stock soared to $4.42 on the New York Stock Exchange, after earlier sliding to a 52-week low of $2.83.