VeriSign to divest many businesses

By Franklin Paul

NEW YORK (Reuters) - VeriSign Inc, which makes switchboards that direct Internet traffic, plans to divest several businesses and focus on its Web site-naming and Internet security services, the company said on Wednesday.

VeriSign shares slipped more that 3 percent after it said businesses targeted for divestiture include its communications, billing and commerce units. Once the strategy shift is completed, the company said it expects revenue growth, profit margins and net income "will be higher."

It did not detail the timing of the planned divestitures, the cost, or how many jobs would be affected.

"Our company knows more about the Internet infrastructure than anyone else. (We) helped design the modern Internet -- that's our core competency. We are going to focus on that," Chief Executive Bill Roper said at a meeting with analysts broadcast over the Internet.

VeriSign makes and operates a key piece of the infrastructure that makes the Internet operate: switchboards that direct every piece of traffic to Web locations with .com or .net at the end of their addresses. It also manages the licensing of those Web site names.

Every time a Web surfer enters an Internet address, it first travels through a VeriSign server, which directs it to its final destination. The system also handles other types of Internet exchanges, including ones that are originated via computer or handle phone calls.

VeriSign said it will focus on growing its Web security business, such as identity protection and authentication services.

Earlier this month the company reported a 24 percent rise in quarterly profit to $19 million. Its Internet Services Group contributed 63 percent of revenue from continuing operations, with its Communications Services Group accounting for the remainder.

VeriSign shares fell as much as $1.41 to $31.74 in morning trade on Nasdaq, giving back most of the gains it scored on Tuesday. The shares later recovered to $32.89, down 26 cents.

The stock is still up 37 percent this year.

(Editing by John Wallace)