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VeriSign (VRSN) Dot-Com Renewal is Actually Positive News - Barron's

December 3, 2012 1:15 PM EST Send to a Friend
VeriSign (Nasdaq: VRSN) shares are higher on the session Monday following a positive mention in Barron's over the weekend.

According to the report, the dot-com registry renewal is actually a good thing for VeriSign. The stock dropped about 13 percent last Friday following an update on the registry. Most of the focus was on a little segment highlighting new terms, which read, in part, "VeriSign will have its $7.85 per domain pricing locked in for the six-year term. Additionally, Verisign no longer has the right to four price increases of up to seven percent over the six-year term."

Wells Fargo was out with comments last Friday, now seeing revenue growth of 7 percent per year, versus 11 percent prior.

Barron's notes that there are about 105 million dot-com addresses in use today, with 15 million dot-net names registered. VeriSign runs both, converting the Web addresses into numerical values that Internet servers can understand. Margins are robust at 45 percent.

Management is relatively pumped about the renewal. The company said that getting over that hurdle now clears the way for the company to monetize over 200 patents and patent apps. What's more, VeriSign higher-ups have also said they expect the U.S. commerce department to renew the contract in 2018 as well.

So, following last week's dip, Barron's thinks VeriSign has enough going for it to get one more renewal: that of investor interest. Shares are up 6 percent.




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