Reeling from Tuesday's news of its loss in a patent-infringement lawsuit with Sprint Nextel (NYSE:S), Internet telephony provider Vonage (NYSE:VG) is facing stiff costs to remain in the business of low-cost telephony. Assuming Vonage isn't successful in its appeal of the recent judgment, it will shell out at least an additional $69.5 million to Sprint Nextel, plus an ongoing 5% royalty on sales. This assumes that the judge doesn't increase the damages from the jury's finding that Vonage's infringement was willful.

If the judgment sticks, Vonage will have paid out a combined $127.5 million to Verizon and Sprint Nextel for rights to transmit phone calls over the Web. In addition, it will shave 10.5% off the top line for these companies going forward. How's that for a gross margin haircut?  

Investors are punishing the stock -- which has sunk below $1 as of this writing -- giving the company a market value of about $150 million, or only half of what it traded at only days ago. While Vonage's cash position was at $277 million at the end of last quarter, it also carries near the same amount in long-term debt.

Upon hearing the news, analysts have been rushing in to downgrade the stock and paint a bleak picture. Rather than agreeing that its business model is tragically flawed, Vonage said it will pursue workarounds to the Sprint patents as well -- at the same time it claimed its technology is different.

Investors are pricing Vonage to succumb to these fees and go the way of SunRocket, which stranded more than 200,000 customers recently after bailing out of the low-margin business. Other voice over Internet protocol players such as cable companies Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC), as well as AT&T (NYSE:T), Qwest (NYSE:Q), and eBay's (NASDAQ:EBAY) Skype division, are probably licking their chops in anticipation of a shot at Vonage's 2.45 million subscribers.

All this adds up to make an already unattractive business all the more rancid. Vonage better add a few after-dinner drinks to the check -- it may make the size of this tab a little easier to digest.

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Fool contributor Dave Mock sticks around for lighter tabs but always needs to use the restroom ahead of heavier bills. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy is good reading over Cognac and a cigar.