VeriSign Q2 loss widens on charges - Update

(RTTNews) - Wednesday after the bell, VeriSign Inc. (VRSN | Quote | Chart | News | PowerRating), a provider of Internet infrastructure services, announced a wider net loss for the second quarter hurt by non-cash impairment charge on certain long-lived assets and assets held for sale besides restructuring charges. But on an adjusted basis, the company earned profit on the strength of 17% top line growth.

Second Quarter Results

The Mount View, California-based VeriSign reported a net loss of $68.04 million or $0.35 loss per share, wider than a net loss of $4.72 million or $0.02 loss per share in the prior year quarter. Results included $190 million for impairment and restructuring charges.

Excluding items, net income would have been $49.83 million or $0.25 per share for the most recent quarter. On average, 18 analysts polled by First Call/Thomson Financial predicted the company to report earnings of $0.23 per share.

Revenues increased 17% to $303 million from $259 million in the previous year quarter. Nineteen Wall Street analysts had a consensus revenue projection of $231.39 million. The company disclosed that its non-core businesses fetched revenues of $70 million during the latest quarter.

Deferred revenue amounted to $780 million, representing an increase of $19 million over the first quarter of 2008.

The company disclosed that its Naming Services closed the quarter with about 87.3 million active domain names in the adjusted zone for dot com and dot net indicating an increase of 20% year-over-year. The division continued to witness demand for dot com by seeking new distribution partners.

VeriSign's SSL services recorded a 14% growth in its SSL certificates in the installed base to 1.056 million from 0.923 million certificates in the corresponding period last year.

The company indicated that there were more than 1.9 million credentials in distribution for its VIP network and one-time password programs.

Total costs and expenses climbed to $371.15 million from $282.22 million in the comparable 2007 period. Of this, cost of revenues accounted for $86.03 million, up from $82.67 million, while sales and marketing costs dipped to $51.99 million from $62.55 million in the year earlier quarter. The company closed the quarter with cash and cash equivalents of $621.02 million.

Commenting on the results, the company's acting chief financial officer Brian Robins said, "Company-wide disciplined expense management contributed to non-GAAP operating margin improvement for the core services of nearly 400 basis points since last quarter, and the solid performance of our core services coupled with other positive working capital contributions resulted in strong cash flow of $169 million in the quarter."

Six-Months Results

For the first half, VeriSign revealed a net loss of $74.15 million or $0.37 loss per share compared to net income of $57.04 million or $0.23 per share in the corresponding period last year. Excluding items, net income would have been $93.63 million or $0.45 per share for the recent period.

Revenues increased to $599.87 million from $528.88 million in the previous year six-months period.

Stock Movement

Shares of VeriSign are trading down by $0.78 or 2.30% at $33.10 in the extended hours trading. The stock closed the regular trading session at $33.88 gaining $0.37 or 1.10%. During the 52-week period, the stock hit a high of $42.50 and a low of $28.46.

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