Displaying posts tagged under "vrsn"
From Google to where it stashes its cash, here’s what Verisign told analysts yesterday.
Google is slowing our growth.
Verisign blames the reduced growth rate in its domain base on overall macroeconomic trends (especially in Europe) and on changes to Google’s search algorithms. On yesterday’s conference call, it certainly focused on the latter.
Basically, Google’s Penguin and Panda updates have hurt some of the companies that register lots of domains solely for search-based monetization. They’re registering fewer domains and letting more expire.
I never thought I’d hear the name Matt Cutts mentioned on a Verisign conference call. But it happened yesterday.
For Q2 the company expects to add only 0.9 million and 1.3 million names.
We stash a lot of our cash overseas so we don’t pay taxes on it.
Like many tech companies, Verisign keeps a lot of cash overseas so it doesn’t have to pay as much to Uncle Sam.
Of the company’s $1.56 billion in cash, cash equivalents and marketable securities at the end of the quarter, approximately $240 million was domestic. The rest was held overseas and hasn’t been taxed in the U.S. yet.
The company continues to work on its tax strategy around these funds.
It will be a while before we see any positive or negative impact from new TLDs.
Except as it relates to marketing expenses, new top level domains weren’t discussed on the call until the last analyst inquired.
This lack of discussion is surprising after Verisign sent a letter to ICANN saying that new TLDs weren’t ready for primetime.
To quickly summarize Verisign’s response about new TLDs: there continue to be delays. We think it will get off the ground in the second half of the year. It won’t be material to us this year.
Will new TLDs ever be material to Verisign? I think it will be marginal on the upside. The company is clearly worried about the downside, though.
We’re getting ready to play hardball with our patent portfolio.
On last quarter’s conference call the company said it was reviewing its patent portfolio to figure out how its intellectual property can help its business.
That review is still ongoing, but CEO James Bidzos reiterated that the goal likely won’t be to extract royalties, “but to use it in support of our business goals and our business planning”.
I’ve work in the intellectual property licensing world, and I can tell you there’s little difference between these strategies. The company wants to extract revenue out of the patents, whether that’s through direct payments or strong-arming other companies to sell the company’s products or enter into other business deals.
.Com registry Verisign reports first quarter earnings.
Verisign reported its first quarter earnings after the bell today.
In the first quarter it added a combined 1.99 million domain names in .com and .net. That brings the total to 123.1 million active domain names in the zone for .com and .net — a 5.5 percent increase year over year. This is an improvement over Q4 2012 when it added only 1.25 million names. But a better comparison my by Q1 of 2012, when it added 2.86 million names to the root.
It processed 8.8 million new domain name registrations in the quarter, down from 8.9 million in the same quarter last year but up from 8.0 million in Q4.
The company reported $236 million revenue for the quarter, which is up 15% from the same quarter last year. GAAP net income was $85 million for the quarter.
Company’s market cap is back up to October levels.
Just as I don’t understand why the DOW has been hitting all time records lately, I also don’t understand this: Verisign is apparently worth the same with or without seven-percent-a-year price hikes on .com.
When Verisign dropped the bomb on October 25 that the Department of Commerce was reviewing its ability to automatically increase prices, the company had a marketcap of about $7 billion.
Verisign signed a contract renewal without the hikes.
Now, six months later, Verisign’s market cap is back up to $7 billion.
Verisign is a stable, cash printing machine. Yet you’d think shaving off hundreds of millions of dollars a year in pure profit would result in a lower valuation.
Company’s patent portfolio isn’t limited to domain name industry.
Last week Verisign said it would consider ways to monetize its patent portfolio.
The company’s patent portfolio is quite broad. In addition to covering domain names, it has patents and patent applications covering everything from digital cameras to online payments to databases to telecom.
Who will it go after?
Let’s take a look at some of the potential targets.
Competing domain registries
Verisign has a number of patents related to registry operations.
It has a collection of internationalized domain name patents (e.g. 8,341,252 and 8,291,048). It also has patents related to running a whois database (8,090,693). It has patents pending covering DNSSEC, the recovery of a failed registry, methods to predict domain renewal rates, and systems to predict traffic to non-existent domains.
Possible targets include Afilias and Neustar, neither of which have meaningful patent portfolios. (At least in the United States. Afilias is headquartered in Ireland).
Although it could get ugly, these competing registries would make good targets for asserting patents.
Domain name registrars
Domain name registrars are Verisign’s customers, so it seems unlikely that the company would get aggressive with them. That said, plenty of companies sue their customers for patent infringement (witness Apple and Samsung).
Verisign’s patents related to domain name registrars cover aspects of bulk checking and registration of ccTLDs (e.g. 8,356,081 7,000,028) and bulk checking of second level domain availability within multiple TLDs (6,560,634).
A more likely (but still unlikely) scenario is that Verisign offers licenses to its patent portfolio to registrars in return for something intangible such as added promotion.
Much like Afilias and Neustar, most domain name registrars are sitting ducks when it comes to patent lawsuits. Go Daddy is the only registrar I’m aware of that has a robust patent portfolio.
Web hosting companies could also fall under this umbrella, and might be easier to go after than a registrar because they often aren’t direct customers of Verisign. Verisign has patents pending related to DDoS, DNSSEC and hosting, etc.
Perhaps an easier target can be found in companies that may infringe Verisign’s non-domain related patents.
Targets could be search engines, software companies, and network equipment companies.
Although they may present fewer known conflicts, a lot of these companies are hardened warriors in the patent arena. Going after them may open Verisign up to counterclaims and some costly battles.
(Interestingly, Verisign recently filed an application covering “systems, methods, and computer software for innovation management”.)
The right approach?
I expect Verisign to tread carefully. Bad press around patent activities could upset the company’s relationship with ICANN and the U.S. government. That could be a problem when it comes to time to renew its .com contract. The company is unlikely to forget that the real key is holding on to that $800 million-a-year deal to run .com.
Verisign stock nosedives on news of new contract without price increases.
Shares of Verisign (NASDAQ: VRSN) are down 15% in early trading after the company announced that its contract to run .com had been renewed without price increases.
Verisign’s contract renewal with ICANN allowed it to raise prices 7% in four of the six years of the contract. That would have allowed the company to raise the price from $7.85 today to $10.29 after four years.
But then the U.S. government, which must approve the agreement, decided that enough was enough with price increases.
Financial analysts are surely running the models right now, but this is a huge blow to Verisign. Four years from now the annual “loss” from this contract change will be more than $200 million, and that’s basically pure bottom line profit.
There are some ways in which Verisign could ask for price increases in the future, but they would most likely be in response to significantly worsening business conditions for the company.
There was little chance that Verisign would lose the right to run the .com registry entirely. Assuming there were back-and-forth negotiations between the parties, it would seem that the U.S. government was pushing for price decreases, which would have resulted in Verisign negotiating to the middle ground of no price changes. But it’s difficult to determine exactly how this went down.
This is certainly a win for domain name registrants.