RealTime IT News

VeriSign, Network Solutions Top ISDEX

Like an engaged couple being showered with gifts and attention on the eve of their wedding, security software vendor VeriSign and Internet domain registrar Network Solutions have been the top-performing stocks over the past month in internet.com's Internet Stock Index.

Though both were down slightly in early trading Thursday, NSOL and VRSN lead the ISDEX with monthly gains through Wednesday's trading of 48 percent and 47 percent, respectively.

In early March, VeriSign announced it would acquire Network Solutions in a stock deal worth about $21 billion. Shareholders of both companies were expected to vote on the merger at separate annual stockholder meetings on Thursday.

The acquisition will enable VRSN to provide its customers of its digital certificate software with additional e-commerce and Web development products and services.

Though VeriSign carries a far higher market capitalization than Network Solutions -- $21.4 billion versus $14.4 billion NSOL actually generates considerably more revenue and is profitable. In the first quarter, the domain registrar logged revenues of $98.2 million and net income of $14.7 million, or 20 cents a share. VeriSign, meanwhile, turned in Q1 numbers of $34.1 million against a net loss of $26.2 million, or 24 cents per share.

When the deal was announced three months ago, I wrote that while VeriSign appeared to be paying too much for NSOL, it was "a merger of superbly positioned market leaders." Though both are experiencing increased competition VeriSign from Entrust Technologies and GTE's CyberTrust, Network Solutions from Register.com and a number of other fledgling domain registrars they remain at the top of their respective markets.

In making the deal, VeriSign gets first shot at selling digital certificates and other e-commerce services to the thousands of businesses that will register their corporate domains through Network Solutions. That alone will help the company cut down on its cost per customer acquisition while allowing it to sell multiple products and services to those same customers.

That's how you build an Internet e-commerce services powerhouse, which was the goal all along for VeriSign.