In the fiscal fourth-quarter earnings report, revenues increased 6% to $412.7 million. Althought the company did not publish its net income figures because of its options backdating investigation, the good news is that it is substantially complete and there was no evidence of intentional wrongdoing.
Management has been focusing on expense reduction in areas like employee headcount, and there is also a new organizational structure, under which the sales and service teams will be unified.
There are two main divisions at VeriSign. First, there is the communications services group (CSG), which focuses on messaging (like SMS and instant messages), billing, and broadband content distribution. In the fourth quarter, CSG revenues fell from $216.2 million to $208.1 million.
But VeriSign is trying to reverse the slump. One important move was to contribute its mobile content business, Jamba!, to a joint venture with News Corp.
Things were much better for VeriSign's Internet services group (ISG), which includes security software, domain name registration services, and real-time publishing applications. In the fourth quarter, revenues for the division increased from $172.8 million to $204.4 million.
The e-commerce certificate business continues to grow, with a 221,000 increase in the fourth quarter, out of a total 807,000 certificates issued. Part of the growth has come from the company's acquisition of GeoTrust. Moreover, VeriSign is also getting uptake from its so-called Extended Validation (EV) certificates, which provide support for Microsoft's
Finally, there was a pickup in demand for security software offerings. Some of VeriSign's new customers in this category include Merrill Lynch
Going forward, management forecasts first-quarter revenues of $380 million and pro forma earnings of $0.22 per share. For the full year, the guidance is for revenues of $1.5 billion and pro forma earnings of $1.06 to $1.07 per share.
Yet this may prove to be conservative. After all, the company should realize savings from its restructuring (especially with its joint venture with Jamba!). It is also likely to increase pricing on some of its offerings, such as digital certificates and domain names.
In the meantime, the Internet's global growth is continuing apace, bringing plenty of potential catalysts for VeriSign's stock.
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