11/12/2009 (9:30 am)
VeriSign says has not cut prices but now talking discounts
Internet security and naming services provider VeriSign Inc sees near-term pricing pressure in its online security certificates business, but expects to grow margins in 2010 by controlling costs, its top executive said.
The company has been hit by a slowdown in its SSL business — which enables secure e-commerce and communication on the Internet — where the annualized average unit revenue for VeriSign, GeoTrust and Thawte-branded certificates for the third quarter was $234, down 3 percent from the prior quarter.
“We will continue to see some ASP pressure for a while,” CEO Mark McLaughlin said in an interview with Reuters. “With the economy improving, that would start to abate.”
The authentication services business, which includes SSL, forms about 39 percent of VeriSign’s revenue. Naming services — VeriSign serves as the global registry for .com, .net, .tv, .cc, .name and .jobs domain names — makes up most of the rest.
The company was offering discounts for long-term customers to preserve the relationships, he said.
“We haven’t cut our prices, but we’re willing to have discussions around giving discounts,” McLaughlin said online cash advances. VeriSign’s rivals in the SSL business include GoDaddy.
“This is sort of a mixed blessing where the low end of the market is growing faster than the high end of the market,” McLaughlin said.
McLaughlin sees an improvement in margins in 2010.
“Into next year, we’ll continue with this tight expense control. We think that we should be able to continue to get some incremental improvement into next year.”
VeriSign has said it expects fourth-quarter operating margins to be in line with that of the third quarter, when it recorded operating margins, excluding items, of 38.6 percent.
The company, which has been implementing a restructuring strategy to sell its slower growing businesses, expects to sell its last remaining unit to be divested by the end of the year, McLaughlin said.
On November 5, VeriSign swung to a third-quarter profit, but its fourth-quarter revenue forecast fell short of Wall Street estimates.
(Editing by Anil D’Silva)
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