The controversial company VeriSign Inc. (NASDAQ: VRSN) has gone up nearly $4 since the sudden resignation of embattled CEO Stratton Sclavos this past Tuesday. I wrote earlier this week that Stratton Sclavos was indeed a polarizing figure, but had survived the Silicon Valley merry-go-round by having lasted 12 years at the helm. Some major institutional investors did not want to be involved with VeriSign's stock as long as Stratton Sclavos was the CEO.This past week has changed that thinking as the stock has lifted from $26 to $30.

As I wrote in my book Stop Losing Money Today, the most important factor in making a decision in owning a stock is the senior management. If an investor cannot get comfortable with a company's CEO, chances are they will avoid the stock. The CEO sets the tone and the vision of the company, plain and simple. The CEO selects the people to run and operate the divisions within a company. The CFO -- chief financial officer -- is entrusted with delivering the vision by the numbers and too communicate effectively with Wall Street as to the composition and direction of those numbers.

Stratton Sclavos was indeed a visionary with VeriSign. When he took over the reigns in 1995, the yet to be public company was doing about $10 million in revenues and was viewed basically as a security company. Under Stratton's watch, VeriSign has grown to a $1.6 billion revenue base company with healthy margins and a strong bottom line. So what happened?

Stratton Sclavos was an acquiring CEO. He believed that whenever something could not be developed internally in a timely fashion -- go out and buy it. Buy it he did. Stratton kept investment bankers busy and always searching for the next property to put into VeriSign's portfolio. Several missteps happened along the way, as well as some good, solid acquisitions. Stratton annoyed some investors as they were concerned about VeriSign deviating away from its core competencies.

Continue reading VeriSign up nearly $4 after CEO resigns

VeriSign up nearly $4 after CEO resigns originally appeared on BloggingStocks on Sat, 02 Jun 2007 11:10:00 EST. Please see our terms for use of feeds.

Stratton Sclavos, Chairman and CEO of VeriSign Inc. (NASDAQ: VRSN) today said he was leaving after 12 years, which for a Silicon Valley-based technology company is the equivalent of a lifetime. VeriSign is trading up a bit following the news. I have known Stratton these past 12 years, having traveled with him on several occasions to visit institutional investors. He is a fine gentleman, and a friend who was as dedicated to his company as any CEO I have ever known and I have known more than 300 CEOs.

VeriSign is the utility of the internet. All .com and .net addresses are registered through VeriSign and all communications ending in .com and .net must pass through the VeriSign data center. VeriSign is also the leader in web site digital certificates. These certificates allow the customer's servers to be secured so that all transaction and sensitive information are encrypted. Key ecommerce vendors from Amazon.com Inc. (NASDAQ: AMZN) to large banks use Verisign's web site digital certificates, which have never been hacked.

The beauty of VeriSign's financial model is that it has high margin products that renewed on an annual basis. The company is emerging as a cash flow juggernaut. It's also the leader in cell-phone communications as the "hand-off" expert from one network to another.

Sclavos is a skilled operator and ably led the company through both the boom and the bust times. He was there for VeriSign's initial public offering in 1996 and kept the investment bankers busy these past 12 years with acquisitions including the Network Solutions purchase in 1999 that secured VeriSign's position as the true utility of the internet.

VeriSign stock is interesting at $27.50. I estimate it will earn $1.10 this year growing to $1.35-1.40 next year. With operating margins headed up to the 22-25% range, VeriSign may look quite tempting for a private equity transaction. With the current market capitalization at $6.5 billion and revenues approaching $1.75 billion, the guns of private equity may be pointing VeriSign's way.

Georges Yared is the CIO of Yared Investment Research where he explores more growth stock ideas.

VeriSign - CEO steps down after 12-year run originally appeared on BloggingStocks on Tue, 29 May 2007 14:30:00 EST. Please see our terms for use of feeds.

VeriSign Corp. (NASDAQ: VRSN) has been named one of America's most admired companies by Fortune magazine for 2007. It would stand to make sense as the CEO, Stratton Sclavos has been in the role for the past 11 years. Any tenure beyond five years for a Silicon Valley technology company is actually quite admirable. Stratton has both a corporate conscience as he attempts to maximize VeriSign's revenues and earnings, and a strong social conscience as well. Having gotten to know him pretty well these past ten years, his goals are to make VeriSign a major, significant company, and to ensure that the internet is available to all, whether they can pay or not.

VeriSign is the toll booth, the registry, for all .com and .net domain names regardless of where they are purchased. The company has planned for extensive expansion beyond just the traditional .com and .net usage. Currently there are 65 million .com and .net domain names and the growth rate is nearly 30%.

VRSN also ensures encrypted communications for ecommerce transactions and information through the issuance of web site digital certificates. It's a recurring revenue model as is .com and .net. VeriSign earns $6 per name, per year. The Department of Commerce has granted VRSN the exclusive registry privileges through 2012, with presumptive renewal rights thereafter. The website digital certificates run about $699 per server, per year.

Continue reading VeriSign: One of America's most admired companies is undervalued

VeriSign: One of America's most admired companies is undervalued originally appeared on BloggingStocks on Tue, 27 Mar 2007 14:26:00 EST. Please see our terms for use of feeds.