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.