VeriSign’s new chief executive said the company plans to divest most of its diverse businesses and get back to its roots in internet infrastructure, reversing the course of his acquisitive predecessor.
Bill Roper told a meeting of analysts yesterday that VeriSign’s corporate DNA comprises internet infrastructure scale and trust, and that businesses not core to this DNA will likely be sold.
Sometimes you have to look in the mirror, and you have to say: What are we good at? What are we not good at? What have we failed at? he said.
We ran all our businesses through this filter, all of them, there were no sacred cows, he said. Like everybody else we have some areas of strength and we have some flat spots.
VeriSign’s strengths, and its focus from now on, are its market-dominating domain name system and SSL services, and its emerging VIP user authentication network.
VeriSign runs the infrastructure for the internet’s largest top-level domains, such as .com and .net, a huge cash cow that is only going to grow as more and more domain names are registered each year.
It is also the largest provider of SSL certificates, which are must-haves for any business that wants to conduct transactions online.
The VIP business sees VeriSign provide back-end authentication services for banks and e-commerce sites. Roper said that VIP won’t be big this year or next year, but it’s an important space that’s going to be big and we’re going to be all over it.
These three businesses are safe. Everything else VeriSign is involved in, which Roper said are all strong and growing businesses, could be considered non-core and may be sold.
These non-core businesses are mostly relatively recent acquisitions, and include mobile billing, ring-tones, wireless messaging, payment clearing, managed security services and content delivery networks.
Over the last five years, under previous CEO Stratton Sclavos, VeriSign made over a dozen acquisitions, spending over $1.5bn to get into markets that were only peripherally related to its core businesses.
For example, the company spent $266m in 2004 for Jamba, also known as Jamster, a provider of mobile phone ringtones. It spent $269m last year on mobile billing provider m-Qube.
These businesses are among those most likely to be divested.
Somewhat less likely to be divested, but still very much in play, include mobile messaging, content delivery and managed security services.
Roper said that VeriSign has already been approached by potential strategic buyers and financial institutions that could be interested in taking over some of the non-core units.
Earlier this month the company reported profits up 24% at $19 million, on revenue which fell 6% to $376.7m. Almost two thirds of its revenue came from its core internet services group.
This year, VeriSign completed a review of its stock options prices, which found error but no wrongdoing.
Six months ago, Sclavos unexpectedly resigned for undisclosed reasons.