) recently announced that the board of directors has authorized
share repurchase worth approximately $458.8 million. This program
is in addition to approximately $541.2 million remaining under
the previous 2010 Share Buyback Program.
The recent authorization brings the total buyback program to
approximately $1.0 billon.
The company has a healthy cash balance with recent
divestitures and is making efforts to return the same to
investors. In 2007, VeriSign decided to focus its attention on
its core competencies to provide highly scaleable, reliable and
secure Internet infrastructure services to customers around the
Hence, the company divested a number of non-core businesses in
its portfolio, such as communications, billing and commerce,
content delivery, messaging and enterprise security services.
Most recently, the company divested its Authentication Services
VeriSign has been consistently repurchasing shares to utilize
excess cash generated from the sale of business. In 2011, the
company repurchased approximately 16.3 million shares for $534.6
million. In 2010, VeriSign repurchased approximately 15.7 million
shares for $437.7 million. In 2009, the company used $252.8
million to repurchase 11.3 million shares.
In addition, VeriSign also paid a special dividend of $2.75
per share totaling $463.5 million in 2011 and a special dividend
of $3.00 per share totaling $518.2 million in 2010.
Although we applaud management's efforts to boost shareholders
value and return excess cash to shareholders, we would like to
see the company investing in suitable avenues leading to
diversification and better growth rates. With the sale of most
non-core operations, continuing operations primarily consist of
Naming Services (comprising Registry Services and Network
Intelligence and Availability [NIA] Services).
The company recently appointed a new CFO and it remains to be
seen if a change in management will affect the company's
performance as the previous management was instrumental in
undertaking the bulk of the restructuring that the company has
undergone in the last few years.
Meanwhile, VeriSign faces stiff competition from the likes of
) and others. Revenues at Tuscows surged 12% in the third quarter
with broad-based performance across the portfolio. Estimates have
been more or less static over the few days for Tuscows as the
company beat estimates by a penny.
As of now, we maintain our Neutral recommendation on VeriSign,
Inc, as we believe that most of the positives are already
discounted at current levels and the current environment demands
caution from the investors.
Our Neutral recommendation is supported by a Zacks #3 Rank,
which translates into a short-term rating of Hold.
VERISIGN INC (VRSN): Free Stock Analysis
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