From Google to where it stashes its cash, here’s what Verisign told analysts yesterday.
Yesterday Verisign announced earnings for the first quarter and held its investor conference call. Here are four key things the company explained.
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.
I don’t know about the US, but here in the UK corporate tax avoidance tactics are a huge scandal in the mainstream media right now.
Kevin,
They’re being talked about more and more, but then everyone loves their shiny iPads so they give companies like Apple a break.
I think it will become a bigger deal over time. Perhaps as part of corporate tax reform. Which may happen in the next 50 years or so.
Let’s see… they’ve made a fortune on the basis of a system that was developed as a consequence of US government research funding, and they intend to make more as a consequence of the US patent laws and the USPTO.
But heaven forfend they pay US taxes!
I love these people that milk every drop they can out of the teat provided by the US government, but scream like babies when asked to support the system by which they have made every dollar.