VeriSign to sell non-security business units

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VeriSign has announced plans to sell some of its business units and focus efforts on its internet infrastructure services. The Mountain View, Calif. company announced Wednesday at its annual Analyst Day that it will concentrate on its core business, compromised of domain naming services, SSL certificates and identity protection and authentication solutions. VeriSign will divest other parts of its portfolio, including communications, billing and commerce.

“The combination of focus and disciplined execution will provide the foundation we need to generate improved shareholder returns,” Chief Executive Officer Bill Roper said. “We have leadership in great businesses with high growth, attractive economic returns and significant barriers to entry.”

Analysts have been critical of VeriSign in recent years after the company appeared to lose focus on internet security and domain name registration. Wednesday’s announcement places the company on the right track as it braces for increased competition in those areas, Gartner vice president and research fellow John Pescatore told SCMagazineUS.com today.

He said the company made the right move by shedding some of its product set.

But even though VeriSign is back to focusing what it is best known for, it still faces “lots of competition and lots of risk” because a number of low-cost providers have emerged that offer similar services, Pescatore said.

He said the company must better vet people seeking new domain names and better market its 1-year-old extended validation certificates.

“They need to do education to consumers,” Pescatore said. “They’ve made no investment in marketing that.”

Tim Callahan, the director of VeriSign’s SSL business unit, told SCMagazineUS.com during a briefing last week that more than 1,500 businesses have deployed the new certificates. Companies seeking the credential must go through a thorough documentation process to ensure they are a legitimate organization.

News of the divestiture plans comes roughly three months after founder Jim Bidzos returned to the role of chairman of the board – a signal to some experts that today’s announcement was inevitable.
“They were turning into a holding company, just a lot of unrelated businesses that sounded related on paper,” Pescatore said. “But that was totally districting them from making strides toward leadership in security.”