VeriSign Gets New Deal, Not as Good as the Old Deal

global network conceptShares of VeriSign Inc. (NASDAQ: VRSN) were halted briefly in premarket trading this morning while the company announced that its six-year deal with the Internet Corporation for Assigned Names and Numbers (ICANN) as the authorized .com registry has been approved by the U.S. Department of Commerce “with certain new terms and conditions.” The renewed agreement begins on December 1 and runs through November 2018.

VeriSign noted several changes in the new agreement. One thing that did not change was the $7.85 fee for domain name registration. However, VeriSign may no longer impose up to four price increases of up to 7% during the six-year run of the new deal. Instead, VeriSign may only increase prices with prior approval of the Commerce Department and only if a new policy is imposed or VeriSign experiences “extraordinary expenses related to security or stability threats.” The restriction on price increases may be removed if the Commerce Department determines that market conditions “no longer warrant such restrictions.”

The company’s CEO said:

This is an important event that provides certainty and sets a clear direction for the Company. This certainty, combined with our strong portfolio of assets, which includes broad DNS expertise, a combined total of more than 200 unique patents and patent applications in the U.S., the world’s most reliable registry, and over $1.4 billion in cash, positions us well to participate in the growing global market for Internet registry and infrastructure services.

Shares of VeriSign are tumbling, down 13.6% in premarket trading at $34.50 in a 52-week range of $32.56 to $50.15.

Paul Ausick

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