VeriSign Falls Most Since 2005 on Contract Review Delay
VeriSign Inc. (VRSN), an operator of Web domain name registries, fell the most in more than seven years after it said regulators have delayed a review of the company’s contract for that business.
VeriSign plunged 15 percent to $39.39 at the close in New York, the biggest decline since July 2005. The stock, up 30 percent this year through yesterday, today led decliners in the Standard & Poor’s 500 Index.
VeriSign, which operates the registry for .com names, submitted the company’s agreement to provide that service to the U.S. Commerce Department on June 26 and anticipated an approval by Nov. 30, according to a statement yesterday. The agency, which along with the U.S. Department of Justice, is reviewing the agreement and may not complete the review on time, the Reston, Virginia-based company said.
“This news comes as a major surprise and we believe has raised significant uncertainties around what was viewed by many, including us, as a formality,” wrote Todd Weller, a Baltimore- based analyst for Stifel Nicolaus & Co, in a client note.
The disclosure “yields significant uncertainty with respect to how to think about VeriSign’s sustainable growth profile,” said Weller, who downgraded the shares to hold from buy.
If the review isn’t finished on time, the Commerce Department is required to agree to an extension of the .com Registry Agreement for six months, or another mutually-agreed- upon “reasonable period,” according to VeriSign’s statement.
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