VeriSign Sheds Businesses in Bid to Refocus
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Embattled Internet infrastructure and security giant VeriSign will undertake a massive divestiture of most of its existing businesses to better concentrate on its "core" domain name and authentication areas.
Speaking today at the company's annual analyst meeting in New York, VeriSign executives said the company would rid itself of a long list of units, including a number of its communications and payments businesses.
"We have been going after doing too many things not well enough in too many places," said John Donovan, VeriSign's executive vice president for products and sales and marketing. "We're going to go out and execute against fewer geographies and fewer products."
Those businesses will either be closed entirely or sold off in deals throughout 2008, Bert Clement, VeriSign senior vice president and CFO, told analysts. Transitioning the businesses to new owners will likely require an additional several months, extending the process into 2009, he added.
After the bloodletting, VeriSign, which operates the .com, .net and .tv Internet suffixes, will consist chiefly of its Domain Name Services (DNS) and Secure Socket Layer (SSL) units. Those areas generate the most revenue and have the most growth potential, execs said.
Those businesses are also among the least vulnerable to competitors, thanks to the heavy infrastructure investments they require.
"Infrastructure is really at the core of our DNA," said Ken Silva, vice president and chief security officer, during the presentation. "It's really one of our huge competitive advantages. It is a barrier to entry into this space, because in order to run this type of operation, you've got to build an operation that is global, always available and, by the way, is battle-hardened."
Making both businesses even more worthwhile to maintain is the fact that they both leverage many of the same technology assets, Silva said.
The sweeping changes come as a result of what spokespeople described as a five-to-six-month review of the company's businesses. Executives said paring down its lines of business would help VeriSign focus on the markets in which the 12-year-old company has been operating since its inception.
"Our DNA really is basically Internet infrastructure at the core, surrounded by scalability and trust," Silva later told InternetNews.com. "If you really look at the two absolute core services we have, they're SSL and DNS. We've been a player since those markets started or since those protocols started ... They're at the heart of what we do."
Another business that survived the restructuring is the VeriSign Identity Protection business. Executives said the unit, which offers a suite of identity protection and authentication services for consumers, represents a significant growth opportunity. As a result, VeriSign brass said it plans to continue investing in that area, though it's less developed than the company's DNS and SSL businesses.
Executives also said VeriSign is looking into whether to continue three additional businesses, its Managed Security Services, Mobile Messaging, and Content Delivery Network units. Those areas face a combination of entrenched competition, require sizable investment, or are in markets that are still maturing, they said.
The news comes following a tumultuous year for the Internet infrastructure and transaction player, which has suffered accounting questions and management shakeups.
Last November, the company restated millions in earnings from previous years, due to accounting errors. CFO Dana Evans left in July.
The company's longtime CEO Stratton Sclavos resigned abruptly in May amid concerns about the company's sprawling strategy. Sclavos, who has since been replaced by former board member Bill Roper, had overseen a slew of acquisitions in recent years that continued the company's dramatic expansion into new areas.
During today's analyst meeting, Clement said the company plans to continue making acquisitions, but would slow its pace.
"The perception on the Street was ... we were an acquirer," Clement said. "That's definitely not the case on a going-forward basis."
"We're going to invest in companies and do the same process that we've done for our strategic business review when we look at M&A," he added. "We're going to make sure [an acquisition] fits our DNA, that we can leverage our infrastructure, leverage our core, and have an ability to win there."