VeriSign Shares Falls on Acquisition News
NEW YORK — Shares of VeriSign Inc., whose businesses range from managing the ".com" and ".net" domain names registry to network security and connectivity, fell Monday after the company said it would buy a consulting company for about $52 million.
The Mountain View, Calif.-based company's stock fell $1.03, or 4.3 percent, to $22.97 in afternoon trading on the Nasdaq.
VeriSign said Monday it planned to purchase inCode Wireless Consultants, a San Diego-based consultancy that focuses on wireless and other technology.
"We view this acquisition as outside VeriSign's core recurring transaction processing business, as inCode is a consulting firm. However, this could strengthen VeriSign's relationships with key telecom operators," wrote Wedbush Morgan analyst Scott Sutherland in a note to investors.
Sutherland noted that inCode's customer base includes wireless carriers Vodafone Group PLC, Cingular Wireless LLC, Japan's NTT DoCoMo Inc.
"We thus believe inCode will allow VeriSign to be in front of potential customers as they make their technology decisions," Sutherland wrote.
The analyst added he expected the acquisition to have little impact on the share price and kept his "Hold" rating with a $21 price target.
VeriSign is waiting for the Department of Commerce to approve a new contract governing its right to manage the sale of ".com" domain names through 2012.
In a note published before the acquisition was announced, Shaul Eyal wrote he thought the new contract, which lets VeriSign raise prices for the URLs by 7 percent each year, could add 10 cents per share to the company's 2008 earnings, and as much as 94 cents per share in 2012.
Eyal kept his "Sector Performer" rating and $24 price target on the stock.
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11-27-2006, 09:50 PM
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