) posted solid earnings on continuing growth in its user base
despite the rising popularity of other top level domains. The
company recently renewed its contract with ICANN to be the
authoritative registry operator for .net domains for 6 more years.
It also announced an anticipated price hike for .com and .net
domains, which we have already factored in our model. Upside to our
forecast could arise from market share gains as new rules will
allow businesses to register any domain name. This could lift our
forecast for total user base of .com and .net domain names that we
currently expect to increase from ~120 million this year to around
350 million by the end of our forecast. The company is also
followed by investors in Internet security names like Symantec (
) and Intel's Mcfee (
) among others.
We have revised our
Trefis price estimate for VeriSign to $36
, accounting for the lower net cash balance and implies a 10%
upside to the current stock price.
More Domain Names to Impact Verisign's Market Share
Aside from the growth in its tradition domain names business,
Verisign will gain as organizations start to register their own
domain names called general top-level domain names or gTLDs - think
.google, .apple, etc. ICANN recently approved a plan to increase
the number of generic top-level domains. This will open up
opportunities for an organization to register its own top
level domain, starting January 12, 2012.
If Verisign is able to attract new business by offering domain
registrar services to the organizations applying for new gTLDs,
that could mean a whole new revenue stream which will compensate
for the decreasing growth in .com/.net domain name registrations.
On the other hand, if it isn't able to attract new business for the
new gTLDs, it could end up losing market share.
Check out our complete analysis of Verisign