As has happened with so many big-ticket Internet assets, the business known as Network Solutions was sold off relatively quietly yesterday. Authentication software vendor VeriSign (NASDAQ:VRSN) said Thursday morning it was selling Network Solutions to Pivotal Private Equity for $100 million -- $60 million in cash, a $40 million note, and a 15% stake in the company.
VeriSign's original purchase of Network Solutions was one of the landmark deals of the dot-com land grab, a stock-only transaction valued at a remarkable $532 per share, or $21 billion, when the deal was announced. (The deal closed at $16 billion.) It also helped to draw attention -- and competition -- to the registrar business, with dozens of companies leaping into the fray at the first opportunity.
Now it's getting out of the business, though it maintains the registry business as sole manager of the top-level dot-com and dot-net domains worldwide. (The "Fool" in "Fool.com" is known as the second-level domain. These are handled by the registrars, while VeriSign and registries that handle the other top-level domains maintain the top-level names in a database.)
VeriSign at one time spent heavily to build its registrar business, but is now selling it off despite profits as revenue growth slows. Certainly the fresh cash is a meaningful addition to the balance sheet, and in press reports the company, citing considerable interest, hinted that it got a good deal.
The bigger picture, however, feels more like another dot-com tombstone than anything else: Company pays too much for asset that delivered too little, then sells it at a deep discount. Remember, VeriSign returned the Network Solutions name to the business earlier this year, while keeping the cash cow registry business, renaming it VeriSign Naming and Directory Services, and folding it into its Internet Services Group. The writing was seemingly on the wall.
With the company unprofitable in recent quarters, VeriSign has clearly decided that $60 million in cash (plus the rest of the "take") was a better deal than struggling to re-register bubble-era customers and maintaining growth in a difficult, competitive business that sometimes has brought it bad publicity.
Still, it seems a faintly ignominious "end" for one of the highest of the former highfliers.
You can reach Dave Marino-Nachison at [email protected]
