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Ranking Domain Name Stocks in 2009

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Mixed results for domain name stocks in 2009.

The U.S. stock markets returned about 35% in 2009. Domain name stocks were a mixed bag, however. Here’s how six publicly traded companies fared last year, based on the closing price December 31 of 2008 versus 2009.

Tucows (AMEX: TCX) – Up 106% – Tucows aggressively bought back shares in 2009, reducing its shares outstanding and thus increasing their price. But the buybacks only tell part of the story; the company did a good job weathering the financial storm.

Dark Blue Sea (ASX:DBS) – Up 100% – Thanks to a buyout from Photon Group, Dark Blue Sea investors who got in late were able to make a bit of a return.

VeriSign (NASDAQ: VRSN) – Up 27% – Investors shoved aside their worry of a lawsuit that might force VeriSign to lower .com prices.

AdLINK (DUS: LKI) – Down 1% – Sedo parent AdLINK held steady through its transition and sale of the display ad business, closing the year on the DUS at 3.14 EUR.

Marchex (MCHX) – Down 13% – Loss of Yahoo Site Inclusion as a product could weigh on stock going forward. Can Marchex shine as the king of local?

Live Current Media (OTCbb: LIVC) – Down 21% – Sold cricket business, sold big value domain names such as Call.com and Brazil.com. What’s left? An online perfume business and a partnership for Karate.com.

Dark Blue Sea Accepts PGA Buyout, What Does it Mean for Fabulous?

by — Domain Registrars 13 Comments

Photon Group to acquire Dark Blue Sea.

Dark Blue SeaDoes a nickel make all the difference in the world?

Dark Blue Sea has accepted (pdf) Photon Group’s takeover bid after Photon upped its offer from 30 cents per share to 35 cents per share. In a joint statement, Dark Blue Sea Chairman Vernon Wills stated “We are pleased with the increased offer. It is in the best interests of DBS that this transaction is concluded as promptly and efficiently as possible.”

Let’s rewind a little bit and see what Wills and the board at Dark Blue Sea, parent company of Fabulous, had to say about Photon Group when it wanted to insert two of its own onto DBS’ board (something it will do after the takeover).

Photon may potentially change the strategy of Dark Blue sea in a way that will benefit Photon shareholders and not all Dark Blue Sea shareholders…The Directors of Dark Blue Sea believe that Photon is looking at Dark Blue Sea as an opportunity to reduce their debt be either selling the company, introducing significant debt onto Dark Blue Sea’s balance sheet by buying one or more of Photon’s businesses, or starting aggressive business activities to boost short term profitability at the expense of longer term shareholder value”.

That was before Photon’s 30 cent offer, and also before the 35 cent offer.

Is the offer of 35 cents per share enough to change DBS’ mind that Photon is looking at the opportunity as a way to reduce its debt or over-leverage DBS? Or does it just mean that at 35 cents, the board is willing to jump ship and feel lucky to walk away with what it got?

Or maybe it was just shrewd negotiation. But it’s a fair question to ask if you’re a Fabulous customer.

Photon Group Submits Formal Takeover Offer for Dark Blue Sea

by — Domain Registrars 3 Comments

Group submits plan to takeover Fabulous’ parent company.

FabulousPhoton Group has submitted its formal share purchase statement (pdf) for its planned purchase of outstanding Dark Blue Sea shares. Dark Blue Sea is the parent company of domain name registrar and parking company Fabulous.

Photon owns almost 30% of the outstanding shares in the company. In a letter to shareholders, Photon Group Executive Chairman Tim Hughes says the offer represents a premium to the average share price prior to the company’s buyout announcement. It also represents 16 times Dark Blue Sea’s FY2009 earnings before interest, taxes, and impairment.

Photon gives a number of reasons for shareholders to sell out, including:

Under current management there has been a significant deterioration in the business and future profitability is uncertain. In the last two years, there has been significant declines in the profitability and share price of DBS. In FY2009, reported net profit after tax fell by 74%. This followed a 24% decline in reported net profit
after tax in FY2008…

Notwithstanding this poor performance, the DBS Board has not provided DBS Shareholders with any clear direction or strategy for the recovery of the business. Further, DBS management has an unproven track record at executing any alternative business plans required for the recovery of the business.

The offer will close sometime in December, provided that Photon is able to purchase enough shares to own 50.1% of the company and there are no major occurrences.

If Photon acquires a controlling stake in the company, it plans to insert two Photon employees onto the board of the company. It will then conduct a review of the business “for the purpose of identifying ways in which DBS can enhance its business and the underlying value of its domains.”

DBS management is asking shareholders to take no further action until it has a chance to review the offer details.

Dark Blue Sea and GoDaddy Get Back Together

by — Domain Registrars 4 Comments

Australian domain company signs new sales agreement with Go Daddy.

Dark Blue Sea, parent company of Fabulous, has had a rough year. It probably hit bottom back in July, when GoDaddy pulled out of a sales distribution agreement with the company.

Perhaps it’s one of those on-again, off-again relationships, as the two registrars have inked another sales agreement (link removed because no longer active). This is good news, given that an outside investor is currently trying to take over the company.

I checked in with GoDaddy CFO Michael Zimmerman this morning to understand the nature of the deal. Although he can’t say much, he did confirm that Dark Blue Sea’s domain names will again be available to purchase in GoDaddy’s registration path, appearing alongside NameMedia domains.

[Update: It turns out that Fabulous’ domains will only show up for exact match queries, not the related domains in the premium box.]

The new deal isn’t as complicated as the last one, as GoDaddy won’t be getting options for Dark Blue Sea shares.

When announcing the deal (link no longer active), Dark Blue Sea CEO Greg Platz said it was too early to assess the financial impact of the agreement.

Takeover Bid Launched for Dark Blue Sea

by — Domain Registrars 9 Comments

Photon launches takeover of Dark Blue Sea.

Dark Blue SeaPhoton Group has launched a takeover bid for Dark Blue Sea, parent company of Fabulous.

Photon currently owns 30.55% of all issued ordinary shares of Dark Blue Sea. The company is offering to buy outstanding ordinary shares for 30 cents per share, which it says is a 56% premium to the average share price over the past month.

Dark Blue Sea’s second largest shareholder, Huon Capital, says it intends to accept the offer provided that it doesn’t receive a higher offer.

Photon Group’s offer is subject to being able to purchase at least 50.1% of the company to gain control. It also requires that Dark Blue Sea not issue any additional shares. However, the day after Photon Group announced its offer, Dark Blue Sea announced that it had already issued additional shares the day before Photon’s offer.

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