Weekly Internet Notes: VeriSign, Constant Contact, Shutterfly

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VRSN: Verisign CA logo
VRSN
Verisign CA

Last week VeriSign (NASDAQ:VRSN) has announced it will raise $500 million in secondary notes. It will use the funds for share repurchase and for other corporate activities. Also, VeriSign along with other major players, is trying to patent certain services related to Domain Name System (DNS), in order to create barriers to entry in the domain market. Constant Contact (NASDAQ:CTCT) is still seeking partnerships and alliances. It recently expanded its usage of the Splunk (NASDAQ:SPLK) platform and forged another partnership with Endurance International Group. Shutterfly (NASDAQ: SFLY) recently witnessed some insider trading and its wedding stationery brand has teamed up with celebrity party planner, Mindi Weiss.

Below we give a quick rundown on the most notable events in the last week related to these companies.

See Our Complete Analysis for These Companies Here

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VeriSign

On March 24,  VeriSign announced the pricing of $500 million in 5.25% senior, unsecured notes  that will mature in April 1, 2025. This announcement represents an increase in combined aggregate principal amount from the $400 million offering of notes which VeriSign announced on March 23, suggesting investor interet in the debt. The offering is expected to be closed by March 27, 2015. The notes will be sold through a private placement to qualified institutional buyers in the U.S. under the Rule 144A of the Securities Act of 1933 and to non-U.S. residents in transactions outside the United States pursuant to Regulation S under the Securities Act. VeriSign intends to use the funds for general corporate purposes, including but not limited to share repurchases. (Read press releases here).

On a separate note, the domain name industry might be gearing up for a legal battle with a spate of patent applications. This year to date, leading registrar Go Daddy has applied for 8 patents related to Domain Name System (DNS). VeriSign applied for several patents, including, technical aspects of DNS, enhanced privacy protection, and abuse protection.

The issue with these numerous applications is that most of them cover common practices in the industry. With the huge advent of top-level domains in the market, the existing players are attempting to protect their market shares from competition by patenting common areas of touting domains.

The number of top level domains have more than doubled in the last six months, as 500 dot-words, ranging from .london to .xyz have been added to the existing 300 domains. The number is expected to increase by an additional 500 by the next 6 months. Technology related patents help in creating entry barriers for new players. For example, if a new company becomes successful, it can be drawn into a legal battle related to patent violation by the market leaders. [1] See Trefis forecast for VeriSign’s .com and .net market shares.

Our price estimate of $62 for VeriSign is slightly lower than the current market price. We expect the company to report revenues of approximately $1.06 billion and non-GAAP net income of $415 million for FY 2015. Our GAAP and non-GAAP diluted EPS estimates stand at $3.51 and $3.09, respectively. VeriSign’s stock witnessed around 2% growth over the last week.

Constant Contact

Constant Contact has standardized on Splunk (NASDAQ:SPLK) software, a prominent software platform for searching, monitoring, and analyzing machine-generated big data. As a result of this decision, Constant Contact further expanded its usage of the Splunk Enterprise, which was initiated in 2011. Splunk software aids Constant Contact in providing a secure, always available customer experience, for the latter’s 600,000 small business customers. [2]

Endurance International Group, a leading cloud-based solutions provider for small and medium businesses, had recently formed a strategic alliance with Constant Contact to provide the latter’s email marketing tools to Endurance subscribers. As a result of this partnership, Endurance subscribers, present on BluehostHostGator, and iPage will be able to sign up for email marketing (from Endurance platform) through Constant Contact’s Toolkit, list building, contact management, and social media tools. (Read Press Release). Constant Contact’s email subscriber base will be further enhanced due to this partnership. See Trefis forecast for Constant Contact’s subscriber base.

Our price estimate of $34 for Constant Contact is at a 12% discount to the current market price. We forecast the company will report revenues of approximately $381 million and non-GAAP net income of $48 million for FY 2015. Our GAAP and non-GAAP diluted EPS estimates stand at $0.77 and $1.44, respectively. Constant Contact’s stocks witnessed marginal movement over the last week.

Shutterfly

On March 20th, Shutterfly’s Chief Operating Officer (COO), Dan Mccormick sold 44,443 shares of the company’s stock on the open market in a transaction. The average selling price per stock was $48.22, and the total value of the transaction was $2,143,041.46. As a result of this transaction, the COO owns 78,375 shares in the company, valued at approximately $3,779,242.50. (View SEC Filing).

Shutterfly recently teamed up with celebrity party planner, Mindi Weiss, for its wedding stationery brand, Wedding Paper Divas. Wedding Paper Divas will include features starring Mindy such as, video, blog posts, “Ask Mindy”, and many more. Mindy will provide wedding related advice to couples who desire on planning the event. (Read Press Release).

Our price estimate of $49 for Shutterfly is around 8% above the current market price. We forecast the company to report revenues of approximately $1.04 billion for FY 2015. Shutterfly’s stocks witnessed around 6% decline over the last week.

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Notes:
  1. WHY are GoDaddy and Verisign stockpiling patents? Do I smell war?, The Register, March 4, 2015 []
  2. Constant Contact Standardizes on Splunk Software, Business Wire, March 18, 2015 []