VeriSign Misses Estimates - Analyst Blog

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VeriSign, Inc.  ( VRSN ) reported a net income of $53.8 million or 34 cents per share in the fourth quarter of 2011 compared with a net income of $58.9 million or 36 cents per diluted share in the third quarter of 2011 and a net loss of $40.5 million or 23 cents per share in the previous quarter.

Excluding one-time items but including stock-based compensation expense, net income came in at 35 cents per share, missing the Zacks Consensus Estimate of 38 cents.

VeriSign reported revenue of $204 million in the fourth quarter of 2011, up 3% sequentially and up 14% from the year-ago quarter.

In 2010, VeriSign sold the Authentication Services business to Symantec  ( SYMC ) and closed down the operations of non-core Content Portal Services (CPS).

The continuing operations of the company consist primarily of the results of the Naming Services business, which comprises Registry Services and Network Intelligence and Availability (NIA) Services. NIA Services include the Managed Domain Name System (Managed DNS), iDefense and Distributed Denial of Service (DDoS) mitigation businesses.

The base of registered names for .com and .net totaled 113.8 million active domain names, up from 112 million names at the end of September and growing 8% year over year. The company added 7.9 million net new domain names in the quarter, up 4% year over year.

During the fourth quarter, Verisign completed the move of its corporate headquarters to Reston, VA. In November 2011, VeriSign entered into a new $200 million unsecured revolving credit facility and borrowed $100 million under this facility to finance the purchase of this building.

Operating margin came in at 45.6% compared with 37.7% in the year-ago quarter and 50.1% in the third quarter of 2011.

VeriSign generated $124 million of cash from operating activities and used $129 million in capital expenditures. The company did not repurchase any share in the fourth quarter. In 2011, VeriSign repurchased shares worth $535 million and has $831 remaining under its current share repurchase authorization.

VeriSign ended the quarter with $1.31 billion of cash and equivalents, up from $1.20 billion at the end of the prior quarter. Deferred revenues came in at $729 million, an increase of $6 million from the prior quarter and $66 million from the year-ago quarter.

Guidance

VeriSign earlier announced that the Internet Corporation for Assigned Names and Numbers (ICANN) and Verisign have renewed Verisign's contract to serve as the authoritative registry operator for the .net registry for another six years till 2017.

The company also resolved its five-year long litigation with Coalition for ICANN Transparency (CFIT). VeriSign recently announced an increase in registry domain name fees for .com and .net as per the agreement with ICANN.

Going forward, management now expects revenues between $865 million and $890 million in 2012, up 12% to 15% year over year. Excluding one-time items and stock based compensation expense, gross margin is projected around 80%. VeriSign expects to exit the fourth quarter of 2012 with an operating margin of 52%-54%.

During 2011, VeriSign completed its restructuring plan, which included divesting non-core businesses, the sale of authentication services business and relocating the company's headquarters. Last quarter, CEO Mark McLaughlin resigned as President andChief Executive Officer effective August 1, 2011. Jim Bidzos, Verisign's founder and previous CEO, became the President and Chief Executive Officer effective August 1, 2011.

Verisign recently appointed John Calys as the Vice President and Controller to the position of interim Chief Financial Officer. Management stated that the search for a new CFO is on.

The results did not impress the investors much as shares gained only 0.06% in after-market trading to close at $35.94. In regular trading, shares lost 1.35% to close at $35.92.


 
SYMANTEC CORP ( SYMC ): Free Stock Analysis Report
 
VERISIGN INC ( VRSN ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: SYMC , VRSN

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