Could Verisign's Registrar Acquisitions Help Industry & Hurt Verisign?
Date: Thursday June 21 2001, @07:55AM
Topic: Verisign/NSI

JHendeles writes "Based on the disclosures made about the purchase of and, could Verisign indirectly be undermining the valuation of its own industry?"

Registrars did not appear to be financially troubled and as such should have generated a fair market price. If that is true, than their multiple of $34.7 per domain registrant sets the valuation for larger retail registrars. In a perfect industry (without speculators), this would suggest that Verisign is worth approximately $500-550B US or 4.34% of Verisigns total 11.480B. 

This action could suggest a few things:

  1. Is Verisign's valuation is too high?
  2. Is the registrar trying to stay above the 50% mark?
  3. Did Verisign buy these registrars cheap, suggesting the industry is worth more?
  4. Did Verisign pay for growth or cash flow or both?
If you assume that there are 35,804,410 domain registrations world-wide and all are retail customers, you set the DNS industry at US 1.26B. We all know that at least 30% of the industry is speculators (possibly more). If the industry today is only a $1B industry, can the majority of registrars or registries survive? It wasn't too long ago when the industry was worth 10* this...if margins stay tight and customers become more intelligent, will domain names become lost leaders? 

Post your thoughts on this...

Jason Hendeles

From ComputerWire Inc:

VeriSign Inc is buying the domain name registration business from Network Commerce Inc for an undisclosed amount, to boost its market share which has been dipping recently.

...According to a report from domain name services firm Inc, Mountain View ... VeriSign's total active registrations dipped by 10,000 in the first quarter compared to the fourth, more than any other registrar, while its closest four competitors gained between 99,000 and 410,000 each during the same period. 

Buying gives VeriSign over 680,000 registrations, based on March 30 figures, and adds about 2.35% percentages points to VeriSign's market share of about 50%.

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What is Euro909?
by lextext on Thursday June 21 2001, @08:31AM (#929)
User #6 Info |
By the way, what is Euro909? As near as I can tell, neither it nor its domain name registration subsidiary (NetName-Solutions) was an ICANN-accredited registrar. Which suggests that it was reselling under someone else's license, Core, OpenSRS or perhaps even NSI. The press release describing the tight historic relationship with Verisign makes me think it might simply have been a reseller for NSI, which wouldn't change the numbers on NSI's market share. Any ideas about what Euro909 actually is?

-- Bret

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Re: Could Verisign's Registrar Acquisitions Help I
by hofjes on Thursday June 21 2001, @08:50AM (#930)
User #60 Info
Verisign's value is based on a lot more than just its registrar services. Its registry contract, incredible cash holdings, and other businesses add substantially to its valuation.

The sale price for Registrars should not be misconstrued as its value. The owners sold because Verisign offered a huge amount of money (though the amount may be much less than the actual value). The american dream is to build a business, sell out, and retire. Registrars accomplished this.
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by lextext on Thursday June 21 2001, @10:47AM (#933)
User #6 Info |
Where do you get the $34.7 per domain name registrant figure? -- Bret
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Re: Could Verisign's Registrar Acquisitions Help I
by larry on Sunday June 24 2001, @06:02AM (#953)
User #2751 Info
I don't agree that the press release indicates that they paid 9 million. This is what the press release says:

"Under the terms of the transaction, VeriSign, Inc. agrees to pay Network Commerce all cash
for As of June 18, 2001, the Company's cash position was approximately
$9.0 million or approximately $1.67 per share."

You are trying to infer a price paid for from the cash position of the parent company or the value of the stock of the entire company. The value of a part of a company could easily be more than the entire company when various liabilities are taken into account.

If they wanted to disclose what was paid for they would have stated what they paid for the company.
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