It's getting awfully cheap to stake your virtual claim these days. Through the end of September, Yahoo! (NASDAQ:YHOO) is marking down its annual domain registrations to just $4.98. Everyday pricing at some of the leading discounter sites like GoDaddy.com and RegisterFly.com finds one-year deals for less than $10 a year as well.
Even Network Solutions, the registrar pioneer that was once the most expensive option in cyberspace, has marked its registrations down from $35 to just $11.99 this month. So it surprised me to check Register.com (NASDAQ:RCOM) over the weekend and find registrations still priced at the same $30 mark as when the company trailed Network Solutions in the 1990s dot-com land grab game.
What is Register.com thinking? Last month the company received -- and ultimately refused -- an unsolicited buyout offer at $7.10 a share. It's easy to see why it was hesitant. With Register.com's balance sheet packing more than $4 a share in cash, it would seem almost insulting for an acquirer to commit just $3 a share in new money to close the deal.
Then again, the same VeriSign (NASDAQ:VRSN) that spent $15 billion to acquire Network Solutions back in 2000 was willing to sell an 85% stake for a mere $100 million three years later. So let's not get greedy here. With Register.com's one-year registration prices so out of whack with the competition, it's not as if the company's future were going to get any brighter. Just 62% of its domain registrations were renewed last year. The defections have been roughly matched by new registrations, but that only adds up to stagnant growth.
The key to domain registrations -- and it's why Yahoo! and others have no problem in marking down their offerings -- is selling those some customers on hosting, design, email, and other value-added services. Register.com is trying. Just 80% of its revenue is now coming from its flagship domain name registrations. Back in 2002, that number was 95%.
Register.com has to be more competitive. Folks are still speculating in the dot-com space. They're just not doing it with Register.com. Last week, GoDaddy.com announced that its customers have registered 9 million domains. That's three times as many names as Register.com has under management. Privately held GoDaddy has produced triple-digit growth every year since it was launched in 2000. Register.com doesn't stand a chance marketing to the naive. It may hurt results in the near term, but if Register.com wants to fetch a higher asking price, it's going to have to learn to get aggressively affordable right now.
Other recent stories worth registering:
- Last month, Register.com received the $7.10 a share buyout offer that it would later decline.
- I figured that the company was one of four worthy stocking stuffers over the holidays.
- Yes, even Google (NASDAQ:GOOG) may be getting in on the domain game.
Longtime Fool contributor Rick Munarriz still can't believe that folks are paying $30 for domain name registrations through the full-priced sites. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy .
