VeriSign Grows Business, Loses Money

 
 
By Matt Carolan  |  Posted 2002-01-24 Print this article Print
 
 
 
 
 
 
 

VeriSign, Inc. on Thursday exceeded analyst expectations for its fiscal fourth quarter 2001, and grew its enterprise business, but reported a net loss for the quarter and a multibillion dollar loss for fiscal 2001

VeriSign Inc. on Thursday exceeded analyst expectations for its fiscal fourth quarter 2001, and grew its enterprise business, but reported a net loss for the quarter and a multibillion dollar loss for fiscal 2001. The Mountain View, Calif. provider of domain name registrations and Web identity, authentication and payment services reported a pro forma net income of $72 million and earnings per share of 33 cents, on sales of $284 million. This compares to net income of $46 million, or 21 cents per share at this time last year. Net revenue for fiscal 2001 was $984 million, compared to revenue of $475 million in 2000.
These pro forma numbers excluded business expenses such as the amortization of goodwill and intangible assets related to acquisitions, stock-based compensation charges related to acquisitions, write-down of investments and benefit for income taxes, all of which would ordinarily be considered normal business expenses under generally accepted accounting principles.
The results for the quarter and the year also reflected 19 days worth of financials associated with Illuminet Holdings, Inc., a provider of intelligent network and signaling services to telecommunications carriers, which VeriSign closed its all-stock acquisition of on December 12, 2001. When announced, the deal was worth approximately $1.2 billion. Illuminets products were folded into VeriSigns enterprise and service provider division. The Illuminet purchase is part of VeriSigns strategy to gain a foothold in the voice-over-IP telephony market as the Internet integrates with traditional telecommunications, according to officials. On Jan. 7, VeriSign complemented its Illuminet strategy with an announcement that it would acquire H.O. Systems, Inc., which provides billing and customer care solutions to wireless carriers. Excluding the Illuminet financials, VeriSign reported pro forma earnings of 32 cents per share, exceeding the 19 cents predicted by analysts surveyed by Thomson Financial/First Call. Including one-time expenses VeriSigns net loss for the quarter was $401 million. Net loss for the year was $13.4 billion. "Given the backdrop of a difficult year in both the general economy and the technology sector, were pleased with our Q4 and year-end results," said Stratton Sclavos, president and CEO of VeriSign in a conference call with analysts on Thursday. "We saw less demand than expected for the new .biz and .info domain names extensions, and we had a few enterprise deals slip outside of this quarter," said Sclavos. "Meanwhile the momentum in the overall enterprise business continued, with significant growth in the PKI (public key infrastructure), digital brand management and the consulting businesses." VeriSign saw an uptick of 690 enterprise customers in the quarter, rising from 3,775 in the third quarter to 4,465 in the fourth. "The enterprise and service provider division delivered approximately 52 percent of total revenue for the quarter," said Dana Evan, VeriSigns Chief Financial Officer in the conference call Thursday. "Keep in mind that as we bring Illuminet and H.O. Systems into the fold, we would expect the enterprise and service provider division to start contributing more than two-thirds of total revenue as early as Q1 of this year." Shares of VeriSign were up 40 cents to $36.65, for a gain of 1.1 percent in after-hours trading on Thursday.
 
 
 
 
 
 
 
 
 
 
 

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