No, Go Daddy, No

Is Go Daddy ready to reveal more than its "wardrobe malfunction"-cursed spokeswoman is willing to bare in those spicy ads? According to a story that ran on MarketWatch.com last night, sources indicate that the company has hired Lehman Brothers to take the company public.

Even though the consensus may be that this is a great time for Go Daddy to go public, the past few years haven't been kind to registrars. Register.com was trading for less than the liquidity on its balance sheet shortly before going private. VeriSign (Nasdaq: VRSN  ) sold its Network Solution domains business for a pittance. Those were the two biggest players when the dot-com bubble was huffing and puffing in the late 1990s.

However, their avarice did them in. They took advantage of their market leadership position to command between $30 and $35 a year for domain registrations. It was really only a matter of time before discounters like Go Daddy crashed the party, charging less than $10 a year for the same domain registrations and with more flexibility to boot.

That has led to some incredible growth at Go Daddy, but is the company profitable? If Register and Network Solutions had a hard time winning over investors at much higher price points, it will be interesting to see what the company's financials look like.

Tucows (AMEX: TCX  ) is a small yet profitable player in domain services, but it also toils in other areas like webhosting. Taking advantage of its domain registration popularity by expanding into other areas seems to be the plan at Go Daddy too. Register a name at GoDaddy.com (I have) and you will be treated to flurry of offers on the way out of the checkout screen.

I still want to see those numbers, though. Go Daddy has been able to carve out an edgy marketing campaign but it is still, ultimately, working in a cutthroat commodity business. Let's just hope that if the company does in fact go public that it's not just an exit strategy, but rather an approach to fund expansion into more lucrative areas.

Longtime Fool contributor Rick Munarriz has been collecting domains since the mid-1990s. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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