Verisign to lay off 10% of its workforce.

April 25, 2002 6:36 PM

Verisign to lay off 10% of its workforce. I don't have anything to substantiate my intuition (other than the supposed 'insider' info posted here, which now seems to be highly prescient), but I have a gut-wrenching fear that Verisign is going to go POOF soon. If it does, what will happen to the 'net as we know it?
posted by WolfDaddy (15 comments total)

Fear nothing, I'm sure those 10% were all customer service reps. If you haven't transferred your domain out of Verisign/Network Solutions hands yet then this is fair warning.
posted by jeremias at 6:45 PM on April 25, 2002

I don't believe things are that bad yet for Verisign. While it is running up net losses, it still has a fairly stable asset base.

One good way to see this is to take a look at the balance sheet and discount goodwill and long term investments (which are often in internet companies and may be worth pennies on the dollar). Anyways, current assets (as of 12/31/01) were $ 1090 million with another $532 mil in property and equipment and $223 mil in long-term investments. Discount property/equipment at a 75% rate and longterm investments at 50% rate (to be on safe side) and we get a minimum solid asset base of $1600 million. Against that, Verisign has $833 mil in current liabilities and $198 million in long-term liabilities ... totaling about $1030 mil. The difference between the two ($570 million) should represent the capital owned by the stockholders (i.e. stockholder's equity).

Against the above asset base, they had a pro-forma earnings (ignoring depreciation and writedown of goodwill) of $47 million. This indicates that at least their cashflow is positive. Also, with their neglible debt, they possess a fairly
good ability to sell bonds and other things to raise money if needed. So, I doubt the company is about to go POOF anytime soon.

Of course given my (admittedly back-of-the-envelope analysis) with 236 million shares, I give a "modified" book value of $2 a share. Compare that to the $18.24 price on wall street. The rest of the spread has to be explained by stockholders believing in the future earnings potential of the stock. I sure wouldn't want to be a stockholder.

As long as Verisign can maintain their cashflow (i.e. hold on their customers), they will do fine. This probably explains the silly aggressive tactics they have used over the past few months to try to hold on to customers or switch other registrar's customers back to themselves.
posted by ssheth at 7:24 PM on April 25, 2002

Not bad for back-of-envelope, but they still had $726M cash on hand at the end of the year. Nevertheless, that's less than a year's burn. This sure looks like a desperate attempt to stay alive, and I am glad I do not have any business with them whatsoever.

At least their book value appears to be a positive number.
posted by ilsa at 7:40 PM on April 25, 2002

Why's it always the nice ones, with great customer service and rabidly loyal followings? Why, God, why?
posted by dhartung at 7:51 PM on April 25, 2002

As long as Verisign can maintain their cashflow (i.e. hold on their customers), they will do fine.

And they're doing a real good job at that (they only lost three quarthers of a million domains in February).
posted by dchase at 8:17 PM on April 25, 2002

Oh, yay! According to dchase's link, TuCows (OpenSRS) is now the #2 registrar, behind the evil empire! W00t w00t! Them's people are good folks, them TuCows are.

As to Verisign's domain registrations business, let's not forget they've also got a virtual lock on SSL certificates. By reading Verisign's annual report, I was reminded that Verisign is snapping up competing businesses in this market, including THAWTE in 2000. *shiver*
posted by WolfDaddy at 8:28 PM on April 25, 2002

When Verisign goes under, Network Solutions goes under.

This will officially be a Good Thing^TM for the internet.
posted by Lionfire at 8:33 PM on April 25, 2002

The DNS thing wll take care of itself. There are plenty of competitors ready to step up there. But the SSL cert market is a howling wasteland totally controlled by Verisign and subsidiaries. I will be pissed if I have to go buy a new certificat six months after I just got one.

Is anyone else selling SSL certs that are accepted by the majority of browsers by default?
posted by rusty at 8:58 PM on April 25, 2002

rusty, THAWTE was the only competitor I knew of. There was one other one, which I seem to remember being in South Africa and requiring some weird browser foo for people to accept the certs, but THAWTE was the one I always used, since it was half the price of a Verisign cert.

Hopefully someone will come along and replace both the verisign and thawte certs, and hopefully that won't be someone like microsoft.
posted by mathowie at 9:43 PM on April 25, 2002

Ah, so it's SSL certs you seek? Voila....

Heck, Matt, you should resell them. You've got a server, and we all trust you and OpenSRS.

What's not to love? ;)
posted by dglynn at 10:09 PM on April 25, 2002

Here's a good page on certificate vendors. What I'm wondering is, since only certs that chain back to the Verisign root certs can enable Server-Gated Crypto and push export browsers to 128-bit, and the US Government wrote that exception into the law for Verisign alone, what happens if the company goes under?
posted by nicwolff at 10:38 AM on April 26, 2002

Tucows offers certificates? I remember being baffled when they added a Macintosh section to their software index -- I mean, Macs don't even have Winsock. I guess once you do that, your acronym is meaningless anyway, so you might as well start selling SSL certificates too.
posted by kindall at 11:30 AM on April 26, 2002

Eeek! Verisign's stock price has been cut nearly in half today.
posted by WolfDaddy at 12:04 PM on April 26, 2002

Matt: I got mine from Thawte, but they're not a competitor anymore. Still, their prices are better, and I can pretend I'm not doing business with Verisign.
posted by rusty at 1:54 PM on April 26, 2002

what will happen to the 'net as we know it?
it will become a clever spoof of the net as we know it. the bottom lines of sites without SSL encryption will suffer. i shudder in terror.
posted by quonsar at 4:15 PM on April 26, 2002