A very interesting post on the financial publication Barron’s today discussing VeriSign.
In touting its undervalued stock price to investors, Barron’s noted that share prices of VeriSign have underperformed, compared to the stock market, and put the blame squarely on the decision Court of Appeals of in the case of CFIT vs. VeriSign.
“””The litigation could force a rebidding of VeriSign’s contract with ICANN. In a worst-case scenario, VeriSign could lose the business when it’s up for renewal in 2012.””
“””Much of the bad news is already priced into the stock, however. The market is assuming that VeriSign’s pricing for a dot-com domain will fall to about $4, according to a recent research note from Credit Suisse analyst Philip Winslow. That would be a 40% reduction from the current price.”””
So according to Barron’s, Credit Suisse and the stock market, is already assuming that this case will cause .com prices to fall back to $4 per year, per domain from its current price of $6.86 and has built this into the current price of VeriSign stock.
Keep in mind that under the no-bid contract it got from ICANN, VeriSign can raise rates 7% next year, so they want, making the price for registrations or renewals $7.34.
We told you back in June that this case was a big deal.
We also noted at the time, that the stock price of VeriSign fell in reaction to the courts ruling.
Nice to see “the street” agree that the price of .com’s have to come down.
Lower price will lead to more registrations though, I doubt they built THIS into stock price
Domain Investor says
2 days ago, a stock analyst on CNBC recommended the Verisign stock.
I thought to myself – “what do they know that I don’t know?”
I haven’t read the Barron article yet. However, I know there are better stock investments than Verisign.
I’m sure Icann and the registries don’t want lower registration cost.
Probably what will happen, Verisign will be awarded the contract in 2012 but Verisign will commit to put $ 1/4 billion into the infrastructure of the internet.
There will probably be an Internet attack and then they will use scare tactics to justify great expenditures and then proceed to seal their position through fear.
Howard Neu says
We can thank ICA and CFIT (I’m on the Bosrd of Directors) for putting this action into play and saving us all a small fortune.
What percentage of a chance would you give that we can get previously paid registration/renewal fees refunded to us?
Howard Neu says
I would say that there are 2 chances of that happening – fat and slim
Buying Domain Names? says
Verisign should have thought about this before they thought they could raise prices 7% several times, with the biggest reason being more profits, at a time that other companies told that they could run the same .com system for less than half price. They thought it would be easy money but maybe they will find out soon that it wasn’t.
I lost not only money but also a lot of time before each price increase by transferring domains for the best registrar that would have the lowest price raise. If I have around 3000 domains, almost all for development, not for resale, and I know how it was, imagine big companies with dozens and hundreds of thousands…