December 6, 2001 6:30 AM PST
VeriSign to act as domain-name watchdog
As earlier reported, the Mountain View, Calif.-based company is prepared to start selling a collection of services to domain-name customers that includes guarding a company's brand name in cyberspace and protecting it from intellectual-property thieves.
To bolster the new services, the company said Thursday that it is acquiring El Segundo, Calif.-based 1GlobalPlace, which helps companies manage and register domain names overseas. It has also entered a definitive agreement to buy New York-based NameEngine, which specializes in managing intellectual property for domain names.
The transactions together are valued at $11 million in stock and cash consideration, according to VeriSign. The company said it expects to realize less than $200,000 in revenues in the fourth quarter of 2001 as a result of these two acquisitions. Approximately 40 employees from the two companies will also join VeriSign.
The moves come as investors question VeriSign's short-term growth prospects in its chief business: registry services for Web addresses ending in .com, .net and .org.
Late last month, U.S. Bancorp Piper Jaffray analyst Gene Munster downgraded VeriSign's stock to "buy" from "strong buy." At the time, Munster said the company's registrar business had lost some ground after the Sept. 11 terrorist attacks and could see further declines in its main domain names next year--sentiment that caused the stock to drop about 11 percent.
The company is the top reseller of .net, .com and .org domain names to the public through its registrar business, which comprised about 46 percent of VeriSign's revenues in the third quarter. It runs the registry, or master directory, for domain names through its Network Solutions division as well. In addition, it sells online-payment technology and secure e-commerce through digital certificates.
"Stripping out the security business, the big revenue for VeriSign comes from its ownership of the dot-com registry. But it's a real static level of revenue," said Ted Chamberlin, networking analyst at research firm Gartner.
"VeriSign said, 'Listen, we have to find value-added services that we can charge a premium for, but also that will solve clients' business problems as well as give additional revenue streams.' These services are moving VeriSign away from IT services to business and marketing."
The company's new offerings fall under the rubric of Digital Brand Management Services. Chief among the services unveiled Thursday are VeriSign's role as watchdog over domain names or brands in cyberspace. It notifies customers when Web sites spoof a trademarked name or register a misspelled version of a Web address.
In concert with digital surveillance companies Cyveillance and Cobion, the company said it would now be able to "spider" the Internet for content and images related to a brand and potential misuse.
In addition, VeriSign aims to help companies with identity management so they can build marketing campaigns around Web site addresses in the United States and abroad. Through its partnership with RealNames, the company plans to consult businesses on registering "shortcuts," or simplified domain names, to help customers reach their products online without typing lengthy URLs.
"Enterprises worldwide are faced with the complex challenge of extending the brand equity they've built in the physical world into the digital world," Maigread Eichten, vice president and business unit manager for VeriSign Digital Brand Management Services, said in a statement. "Our new range of services helps customers offload this complexity to a managed service infrastructure, enabling them to concentrate on growing their brands and businesses."
VeriSign plans to distribute the services through advertising agencies Young & Rubicam and SF Interactive as part of its new professional services partnering program. The company also plans to announce the opening of several new offices including locations in Copenhagen, Hong Kong, Houston, Los Angeles, New York, Tokyo, Paris and Munich.