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Why Verisign, Inc. Shares Plunged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Verisign (NASDAQ: VRSN  )  fell more than 10% early Monday, then settled to close down around 6% after the U.S. National Telecommunications & Information Administration announced it will relinquish control of its role in coordinating the Internet's domain name system.

So what: At first glance, this would seem a terrible thing for Verisign, which gathered nearly $1 billion in revenue last year from .com and .net registration fees under the current system through a contract with the Department of Commerce which runs through 2018. Specifically, Verisign operates the intrastructure for the .com, .net, .tv, .cc, .name, .jobs, .edu, and .gov top-level domain names, as well as two of the world's 13 Internet root servers, and manages and protects DNS infrastructure for 121 million domain names.

Now what: Verisign wasted no time issuing a statement in response, saying the NTIA's decision "does not impact Verisign's .com or .net domain name businesses nor impact its .com or .net revenue or those agreements, which have presumptive rights of renewal."

Instead, Verisign says, the NTIA announcement primarily involves functions which are completely separate from those Verisign performs. Further, Verisign's functions which are covered under NTIA's release have been performed "as a community service spanning three decades without compensation at the request of the Department of Commerce under the Cooperative Agreement."

In the end, it seems safe to say Verisign investors have no reason to jump ship today.

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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8/28/2015 4:00 PM
VRSN $69.55 Down -0.30 -0.43%
VeriSign, Inc. CAPS Rating: ***