Domain name registrar VeriSign has announced they plan to sell most of their Network Solutions unit –specifically, the registrar portion, selling domain names to consumers and corporations alike – for $100 million to an investment company which buys underperformers, news wires reported at midday October 16, though VeriSign will keep a 15 percent stake in Network Solutions.
How this impacts Sex.com owner Gary Kremen's continuing bid to hold the registrar accountable for the 1995 theft of Sex.com by Stephen Cohen is not yet known. Kremen was not available for comment when reached by AVN Online before this story went to press.
Network Solutions had been the registrar for Sex.com when Cohen took Sex.com by way of a forged letter, prompting the litigation by which Kremen won the domain back and a $65 million award against Cohen. Kremen said recently that the case against VeriSign/Network Solutions was moving forward after a federal appeals court sent it back to the lower courts for trial.
VeriSign bought Network Solutions for $16 billion at the dot-com boom's height. In addition to the registrar portion, VeriSign is also including Network Solutions's Web hosting and some other services in the deal. The buyer is identified as Pivotal Private Equity, a Phoenix-based company which will give VeriSign $60 million in cash and a $40 million senior subordinated note as payment in the deal, according to a published report.
VeriSign will keep the registry unit that oversees the master database of .com and .net domain names. Spokesman Tom Galvin told reporters Network Solutions, which represented about 20 percent of VeriSign revenue, ended up not fitting in with the company's long-term strategy.
Network Solutions "was the retail side, rather than the underlying infrastructure side," Galvin said.
Analysts have said the sale price was disappointing considering how high the price to buy Network Solutions had been. Goldman Sachs analyst Sarah Friar published a research note in which she said that the upside was, VeriSign's growth potential could now become more clear, since Network Solutions – hurting under a dot-com bust drop in domain name demand – "was a drag on overall growth and margins."
"We expect the Street's reaction today to be mixed," US Bancorp analyst Gene Munster wrote in his own research note. "We do see this transaction as a positive development long term, in that it allows the company to focus on its key growth drivers."
The deal should close by the fourth quarter. What the deal won't involve in any way, shape or form, is VeriSign's controversial SiteFinder search redirect service, the target of at least two major lawsuits and Internet activists' anger, not to mention a cease-and-desist demand from the Internet Corporation for Assigned Names and Numbers that compelled VeriSign to suspend SiteFinder temporarily.
