[Infowarrior] - VeriSign Falls as Dot-Com Registry Contract Limits Prices

[Richard Forno]

7% increases are insane, so I don't feel any sympathy for them.  --rick


VeriSign Falls as Dot-Com Registry Contract Limits Prices

By Ryan Faughnder - Nov 30, 2012

http://www.bloomberg.com/news/print/2012-11-30/verisign-falls-as-com-registry-contract-bars-price-hikes.html

VeriSign Inc. (VRSN), the main manager of the Internet-address database, plunged the most in a month after a new contract letting the company continue to control Web sites ending in .com limited price increases.

The shares dropped 13 percent to $34.35 at 11:20 a.m. in New York, and earlier touched $32.81 for the biggest decline since Oct. 26. Through yesterday, the stock had advanced 10 percent this year.

The U.S. Department of Commerce approved a contract renewal through Nov. 30, 2018 that lets VeriSign maintain current pricing of $7.85 per domain name registration, the Reston, Virginia-based company said in a statement. VeriSign no longer has the right to four price increases of as much as 7 percent over the term of the contract, an option that was included in the previous accord.

“A major growth driver has been removed,” Shaul Eyal, an analyst at Oppenheimer & Co., said in a research note today. “With $1.4 billion in cash, VeriSign could be considering its capital utilization plan which currently focuses on buybacks.”

In October and November, VeriSign repurchased 1.4 million shares for $62 million, leaving $548 million remaining in its current buyback program, Chief Executive Officer Jim Bidzos said on a conference call with investors today.

“We’re extremely well positioned even without the pricing terms in the previous agreement,” Bidzos said on the call. “We’re still a growth company.”

Internet Addresses

As overseer of the registry, VeriSign translates the words in an Internet address, such as www.bloomberg.com, into the numbers that a computer server understands. VeriSign also works with others that sell .com addresses. Those companies pay VeriSign for the service that connects words to each correct Internet address.

Under the new contract, which was negotiated between VeriSign and the Internet Corporation for Assigned Names and Numbers, price increases will be limited to instances when there are “extraordinary expenses related to security or stability threats, and now require Commerce Department prior approval,” VeriSign said in the statement.

Michele Jourdan, a spokeswoman for ICANN, didn’t respond to calls seeking comment.

To contact the reporter on this story: Ryan Faughnder in New York at rfaughnder at bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5 at bloomberg.net


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Just because i'm near the punchbowl doesn't mean I'm also drinking from it.