VeriSign Losses Cap Otherwise ‘Successful’ Year

VeriSign, Inc. , executives claimed 2001, the year that
marked the start of a long and protracted recession, a success despite the
fact it lost nearly a half-billion dollars in the fourth quarter of 2001.

A net loss of $401 million for the quarter is actually less than what many
analysts expected. Last year at this time, executives spent their time
explaining a $1.3 billion loss for the fourth quarter of 2000.

Wall Street had predicted the company to make only $281 million for 2001;
VeriSign beat those expectations with $284 million.

At a conference to analysts and investors Thursday afternoon, Stratton
Sclavos, VeriSign president and chief executive officer, said the company
had met a majority of the financial and strategic objectives for the year.

“Revenues for the quarter and the year came in at the low end of our
guidance range, but we were able to show sequential growth in each
quarter,” he said. “The year held many challenges but we believe they are
mostly behind us.”

The slowdown in the domain name market, reported by many news agencies in
recent times, had an effect on VeriSign’s bottom line. Domain names
handled by the registry fell from 6.5 million in the third quarter to 6.2
million, which Sclavos said happened “just as the first major renewal cycle
in the industry’s history was set to kick off.”

VeriSign, like AOL Time Warner, is such a large operation covering so many
sectors in the high-tech industry, that it becomes a sector in its own
right. As such, it looks for new acquisitions to spur revenue growth for
the company.

Despite the fact it holds a dominant position in the domain name registry
space (in addition to managing .com, .net and .org, they are the registry
for country domains .tv and .cc) and registrar business (through its
ownership of Network Solutions, Inc.), in 2001 they acquired Illuminet and
H.O. Systems.

Illuminet is an independent telephone directory for local exchange carriers
(LECs) and wireless telephone companies. H.O. Systems is a billing and
customer care company catering to the wireless phone carriers.

The acquisition of these two organization’s certainly had a part in the
losses experience in 2001, but officials expect to see a return on their
investment take shape in 2002, though the revenues will be small as much of
the year will be spent on research and development to “bridge the gap
between voice and data services,” Sclavos said.

Sclavos said that while there are no plans for future acquisitions on tap
for 2002, “if the opportunity presents itself, we’ll pursue them.”

Dana Evans, VeriSign chief financial officer, said the company would post
conservative predictions on its revenue growth for the first quarter of
2002 and its year-end goals. She predicted revenues of $340-$350 million
in the first quarter with a 25 percent per quarter pro forma growth rate,
putting them at $1.5 billion for 2002.

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