Vonage Holdings' (NYSE:VG) cost cutting efforts may have helped it preserve some money during its intense legal battle, but the company's subscriber growth suffered substantially. The broadband telephone company announced a 55 percent reduction in its quarterly loss but suffered a 66 percent reduction in net subscriber growth. Shares gained over 10 percent on the news, however, as investors applauded the company's cost savings.

Meanwhile, Vonage's patent dispute with telecom giant Verizon Communications (NYSE:VZ) is not showing signs of letting up. Verizon recently received a favorable ruling that barred Vonage from adding new subscribers, which could be a potentially deadly turn of events for the new company. Vonage won a stay, however, while the case is being appealed. Unfortunately, the loss of the appeal could also lead to Vonage being forced to pay heavy fines to Verizon for patent infringement.

Many other investors are concerned about the perception that a legal battle will cast a negative shadow on Vonage's reputation with customers and shareholders. But this appears to be the smallest of the problems facing the company. Through cost savings, the Vonage hopes to stay afloat long enough to save its business and win its appeal against Verizon. Whether or not this happens remains to be seen, but this stock is definitely one to watch in the meantime!

Related Companies
Sprint-Nextel (S)
Alltel Corporation (AT)
Verizon Communications (VZ)