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February 10, 1999


By CBR Staff Writer

Domain name registration king Network Solutions Inc posted fourth-quarter net income that more than doubled to $3.7m, or $0.22 per share, besting analysts’ estimates of $0.20. Revenue for the Herndon, Virginia-based company rose 117% to $31.3m, as the number of domain names registered continued to soar. For the full year, net income rose 166% to $11.2m on revenue up 107% at $93.7m. Earnings per share rose 116% to $0.67 for the year. During the quarter, NSI registered a record 621,000 net new names, an increase of 137% from the year-ago quarter and a 22% jump from the third quarter. New registrations for the entire year were 1.9 million, raising the company’s cumulative total of registrations 118% from 1.5 million as of December 31, 1997 to 3.4 million at the end of last year. Fourth-quarter international registrations totaled 168,000, up 91% year-over-year and 22% from the prior quarter. Meanwhile, the company’s consulting services business showed solid growth, with revenues up 117% year-over- year and 47% sequentially at $3.3m in the fourth quarter. For the full twelve months, consulting services revenues were $8m, an increase of 22% over 1997’s $6.5m. NSI also says that since June 1998, the consulting unit has expanded its operations with new offices in Atlanta, Los Angeles and New York to enable local support for its growing client base. Revenues from other sources, such as consulting, will become increasingly important to NSI, as the company will soon be facing competition in the registration area in accordance with an agreement signed last October. Under that deal, it has to begin opening up its business of registering names in .com, .net and .org to other companies later this year, initially to five registrars chosen by the Internet Corporation for Assigned Names and Numbers (ICANN) and eventually to any business that wants to enter the market. Thus the government- sanctioned monopoly which NSI has enjoyed since 1993 as a registrar will soon evaporate, while its status as the sole registry for top-level domains has been guaranteed only until September 2000 through a contract extension. The good news helped firm NSI’s stock price on Wednesday, sending it up $5.875, or 4%, to close at $153.875. The shares were in need of some support after plunging $26.125 on Tuesday and $23.625 on Monday, shaving more than 25% off the company’s market value. Earlier this week NSI sold 4.58 million shares in a secondary offering – the largest internet offering on record – but none of the proceeds went to the company. Instead, its former controlling shareholder Science Applications International Corp raised $765m by selling 4.5 million shares at $170 each while other selling shareholders sold 80,000 shares for $13.6m. The offering reduced SAIC’s stake in the company from about 75% to roughly 45%.

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