4 things Verisign stated on its investor conference call
From Google to where it stashes its cash, here’s what Verisign told analysts yesterday.
Yesterday Verisign disclosed earnings for the first quarter and held its investor conference call. Here are four key things the firm explained.
Google is slowing our growth.
Verisign blames the reduced growth rate in its domain base on overall macroeconomic trends (especially in Europe) and on changes to Google’s search algorithms. On yesterday’s conference call, it certainly focused on the latter.
Basically, Google’s Penguin and Panda updates have hurt some of the firms that register lots of domains solely for search-based monetization. They’re registering fewer domains and letting more expire.
I never thought I’d hear the name Matt Cutts mentioned on a Verisign conference call. But it happened yesterday.
For Q2 the firm expects to add only 0.9 million and 1.3 million names.
We stash a lot of our cash overseas so we don’t pay taxes on it.
Like many tech firms, Verisign keeps a lot of cash overseas so it doesn’t have to pay as much to Uncle Sam.
Of the firm’s $1.56 billion in cash, cash equivalents and marketable securities at the end of the quarter, approximately $240 million was domestic. The rest was held overseas and hasn’t been taxed in the U.S. yet.
The firm continues to work on its tax strategy around these funds.
It will be a while ahead of we see any positive or negative impact from fresh TLDs.
Except as it relates to marketing expenses, fresh top level domains weren’t discussed on the call until the last analyst inquired.
This lack of discussion is surprising following Verisign sent a letter to ICANN saying that fresh TLDs weren’t ready for primetime.
To quickly summarize Verisign’s response regarding fresh TLDs: there continue to be delays. We think it will get off the ground in the second half of the year. It won’t be material to us this year.
Will fresh TLDs ever be material to Verisign? I think it will be marginal on the upside. The firm is clearly worried regarding the downside, though.
We’re getting ready to play hardball with our patent portfolio.
On last quarter’s conference call the firm stated it was reviewing its patent portfolio to figure out how its intellectual property can help its business.
That review is still ongoing, but CEO James Bidzos reiterated that the goal likely won’t be to extract royalties, “but to use it in support of our business goals and our business planning”.
I’ve work in the intellectual property licensing world, and I can tell you there’s little difference between these strategies. The firm wants to extract revenue out of the patents, whether that’s through direct payments or strong-arming other firms to sell the firm’s products or enter into other business deals.
