Leading internet infrastructure services provider
) recently announced a hike in the registry domain name fee for
.net top-level domain names, in agreement with the Internet
Corporation for Assigned Names and Numbers (ICANN).
The price increase will be effective from July 1, 2013. As of
July 1, 2013, the registry fee for .net will be $5.11, up from
the earlier level of $5.62.
VeriSign is the registry of domain names within the .com, .net
and .name generic top-level domains (gTLDs) under agreements with
the ICANN and the U.S. Department of Commerce (DOC).
Earlier in January, the registry fee for .com domain names
increased from $7.34 to $7.85, and the registry fee for .net
domain names was increased from $4.65 to $5.11.
The news of the price increase came in just after the approval
of the company's agreement. Most recently, the U.S. Department of
Commerce approved the renewal of VeriSign's agreement with the
ICANN to serve as the authoritative registry operator for the
.com registry. The term of this agreement, effective from
December 1, 2012, would continue through November 30, 2018.
However, the agreement includes certain new terms and
conditions. VeriSign's current pricing of $7.85 per domain name
registration will continue for the six-year term of the
agreement. It also mentions that VeriSign will not be entitled to
four price escalations of up to 7% during the six-year
Nevertheless, the price increase will positively impact the
top line. In 2011, VeriSign completed its four-year restructuring
plans, which included divesting or winding down non-core
businesses, the sale of Authentication Services business, and
relocation of its headquarters.
This restructuring has resulted in a more efficient and more
focused VeriSign with opportunities ahead. Management can focus
on the standalone business of Naming Services, leading to better
Meanwhile, competition continues to be stiff for VeriSign from
the likes of
) and others.
As of now, we prefer to be on the sidelines and hence maintain
our Neutral recommendation as we believe that most of the
positives are already discounted at current levels.
Our Neutral recommendation is supported by a Zacks #3 Rank,
which translates into a short-term rating of Hold.
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