Verisign shares drop 14% after hours on pricing concerns, slower growth
Shares off sharply as .com price hikes in doubt.
VeriSign shares are down 14% in after hours trading to about $40.00 at the time of writing. This is likely do mostly to concerns over VeriSign being able to hike prices 7% per year in its .com contract renewal. In its earnings release this afternoon, the company stated:
As a result of communications beginning in October 2012 with the Commerce Department, we have concluded that the Commerce Department may not complete its review and approve the renewal of the .com Registry Agreement prior to its expiration on Nov. 30, 2012, and that the Commerce Department, together with the Department of Justice, is reviewing the .com Registry Agreement’s pricing terms. Pursuant to the terms of the Cooperative Agreement, if the .com Registry Agreement is not approved by the Commerce Department prior to its expiration, the Commerce Department is required to agree to the extension of the .com Registry Agreement for six months, or such other reasonable period of time as the Commerce Department and Verisign may mutually agree.
The company also came in below expectations on new .com and .net adds for the quarter. It has forecasted 1.6 million to 1.9 million net adds in Q3 but end up with just shy of 1.4 million.