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RealTime IT News

VeriSign's Lock on Security Market Tightens

The behind-the-scenes technologies needed to protect digital communications over the Internet is not glamorous but it will be lucrative.

E-commerce transactions need a single standard more badly than personal computers needed a single operating system: the company that holds the keys to the digital security standard is going to be in a highly-desirable position.

Recent results indicate that VeriSign (NASDAQ:VRSN) is grabbing this brass ring and is about to start enjoying the spoils.

The good news is buried in VeriSign's financial results for the quarter ending June 30. In the quarter, VeriSign broke even, handily beating last year's second quarter loss of 11 cents a share and the 1999 first quarter's loss of 4 cents a share. All signs point to this recent quarter as the turnaround point from losses to profits. On seeing the numbers, BancBoston Robertson Stephens raised its estimate on earnings for 2000 by 2 cents to 29 cents a share for the year.

The strong quarter is an indication of momentum building. VeriSign is racking up new business with a string of accounts signed. The company sold more than 27,000 certificates in the quarter, a 93 percent increase. Very encouraging are deals with VISA (for access to more than 21,000 member banks), with Critical Path (opening up a new line of business in protecting e-mail traffic), and with Network Solutions (for promotion on a directory of commercial "dot com" domains).

But most impressive is the traction VeriSign is getting from winning approval from the U.S. government for exporting its most advanced digital certificates. Within a few weeks of being authorized to expand its sale of 128-bit encryption, VeriSign signed resellers in Australia, Greece, the Middle East and Canada.

The full impact of those deals won't show up for a while but the company seems to be hitting on all cylinders right now with its existing customer base.


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