Asked about a sale on VeriSign’s first-quarter earnings conference call yesterday, Sclavos said the focus has been on a fairly deep restructuring of the operation, changes to how we look at marketing, changes in how we look at customer satisfaction.

VeriSign spun out NSI, which leads the domain name retail market, into a wholly owned subsidiary in January, which had the effect of exacerbating rumors that it would be sold off, possibly via a management buy-out.

Sclavos, asked whether the NSI business is attractive enough to keep in-house, said that the unit is still profitable, albeit below the corporate average on a margin basis, and that the company will will always consider strategic alternatives.

NSI contributed 25% of VeriSign’s revenue in the first quarter, some $66m, but CFO Dana Evan said that the company expects that number to drop $5m to $8m per quarter for the remainder of 2003.

She said yesterday that the company expects the second-quarter decline to be at the high-end of that range. The renewal rate for expiring registrations was up to 54% from 51% in the fourth quarter of 2002, and the average registration period was well above two years, which has the effect of increasing NSI and VeriSign’s long-term deferred revenue.

In the quarter, NSI customers registered 450,000 new names, and renewed or extended the registrations for 930,000 more, meaning the company ended March with 8.9 million domain names under management.

Overall, VeriSign reported a first-quarter net loss of $53.4m, compared to a loss of $39.7m last year, on revenue that fell 18% to $270m. Excluding one-time charges related to restructuring and such, the company would have been profitable to the tune of $42.8m.

One effect of the NSI spin-off was that the company started breaking down its revenue into three segments – NSI, internet services (security, registries, payments and brand management) and telecommunication services (signaling and billing).

In the first quarter, Internet Services Group brought in $103m, 38% of the total. It sold and renewed 94,000 SSL certificates for a total of 383,000, down 9,000 sequentially. It added 6,000 merchants to its payment services business to total 89,000.

Sclavos told the conference call yesterday that new opportunities for the certs business include issuing certs for wireless LAN access points, and rights management associated with web services applications.

The registry business took a hit from losing the contract to operate the .org domain name at the end of 2002. The registry had 26.6 million names in it on March 31, an increase of 800,000, net of losing over two million .org names.

Source: Computerwire