An article in Red Herring talks about Verisign, its Network Solutions disaster, and where it’s headed.
The article in the January 30 print edition discusses CEO Stratton Sclavos’ vision to make the company last into the future. But its past isn’t so rosy. Verisign hit a market peak of $255 per share during the dot.com bubble and has struggled since then.
Here are two excerpts relevant to the domain name industry:
On acquiring domain registrar Network Solutions, which it later sold:
At the height of the tech bubble in 2000, VeriSign made its biggest bet and bought domain name registrar Network Solutions for $21 billion. Analysts gasped at the 48 percent premium that VeriSign paid, but the company remained confident that the deal would boost revenues.
It turned out Mr. Sclavos did pay too much. The domain registry business currently brings in only about $220 million annually; the acquisition pushed the company into the red and forced it to write off $17 billion.
On Verisign’s registry contracts:
VeriSign also faces trouble on the domain registry front. Two trade groups, the World Association of Domain Name Developers and the Coalition for ICANN Transparency, which together represent nearly 300 domain name registrars, have sued VeriSign and ICANN, alleging a recent settlement between the two over the domain name registry violates U.S. antitrust law. The legal slugfest has forced ICANN to say that the settlement is not yet final and that it is open to feedback from registrars. This action has thrown into doubt the incremental revenues of $40 million that a price hike could bring.