Verisign (NASDAQ:VRSN) is scheduled to announce its Q4 2011 earnings on January 26. We currently have a $37 Trefis price estimate for Verisign, which is nearly in line with the current market price. Verisign is primarily a domain name registrar which has the exclusive registry rights for .com and .net domains from ICANN. Its .com and .net domain registration business accounts for nearly 90% of Verisign’s $37 Trefis price estimate and is the only major business of the company after it sold off its security and authentication business to Symantec (NASDAQ:SYMC). Verisign competes primarily with other domain name registrars like NeuStar, Employ Media, and Afilias to win new and maintain existing registry rights.
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Focus on .com and .net domain registrations
Since almost all its revenues are generated from domain registrations, the growth in .com and .net domain registrations is the major driver for Verisign’s revenues. Verisign had reported nearly 112 million active .com and .net domains at the end of Q3 2011. We expect the number of net active .com and .net domains to be approximately 114 million by the end of 2011.
The number of total domains has been increasing rapidly, but we expect .com and .net domains as a percentage of all domains to decline as other top level domains become popular.
Verisign may also be able to generate additional revenue by providing domain registrar services for custom TLDs like .google and .apple in the coming years, but that will likely be much lower than the revenue from its core business. We will be looking for any announcements related to this during the earnings call.
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