VeriSign quarterly earnings beat estimates
BANGALORE (Reuters) - U.S. internet security provider VeriSign Inc (VRSN.O) reported a quarterly profit that beat Wall Street expectations on the strength at its core businesses and said it was on track to meet its full-year forecast.
But the Mountain View, California company, which is being affected by a slowdown in online advertising growth, gave a fourth-quarter revenue outlook that fell short of market estimates.
The outlook also reflects the impact of the slowing economy, Interim Chief Executive James Bidzos said in an interview with Reuters.
"We're less sensitive to the economic downturn, but we're not immune to it," Bidzos said.
VeriSign, which provides naming and authentication online services, had a strong cash position, with $650 million in cash and cash equivalents and the roughly $200 million from the sale of a unit, he said.
The company has been divesting slower-growing units and focusing on its website-naming and Internet security services.
VeriSign sold its remaining 49 percent stake in Jamba, a ringtone provider, to News Corp NWSa.N for about $200 million in the quarter.
Bidzos told analysts the divestiture process has slowed. He told Reuters that his company had finished negotiations for the sale of a sale of a bundle, a term VeriSign uses to group its non-core units. But it has not been able to complete the transaction because of high interest rates, he said.
It has three major bundles left, including communications. The potential sale of the non-core units is expected to strengthen its cash position.
In the third quarter, VeriSign posted a net loss of $200 million, or $1.02 a share, compared with a profit of $15 million, or 6 cents a share, a year earlier. Revenue rose 14 percent to $246.1 million.
According to Reuters Estimates, the company earned 28 cents a share, excluding items, for the latest quarter, topping analysts' consensus view of 26 cents.
Revenue at its core businesses was up 18 percent to $240 million.
"For a company to deliver 18 percent growth in this environment, it is one of the better growth stories out there in the market," Wedbush Morgan Securities analyst Scott Sutherland said in a phone interview.
VeriSign shares closed down 7 percent at $19.55 Thursday on Nasdaq. The stock has lost nearly half of its value since the start of the year.
(Editing by Deepak Kannan, Leslie Gevirtz)
