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VeriSign to shed businesses, return to security roots

VeriSign executives say the company will divest businesses in its portfolio, including communications, billing and commerce to focus on its core businesses, including security..

VeriSign Inc. will shed several businesses in order to refocus on its security and domain name registry services.

At the company's annual analyst day in New York on Wednesday, VeriSign executives announced that the company will divest businesses in its portfolio, including communications, billing and commerce. It will focus on its core businesses such as SSL certificates, domain name registry services, and identity protection services.

"The combination of focus and disciplined execution will provide the foundation we need to generate improved shareholder returns," VeriSign CEO Bill Roper said in a prepared statement.

VeriSign, of Mountain View, Calif., got its start in 1995 selling digital certificates to secure online transactions. In the past few years, the company had branched out into diverse offerings, including content portal services, supply chain consulting, and VoIP services.

Analysts praised the company's new, slimmed-down strategy.

"Basically, VeriSign has been operating as a big, high-tech conglomerate with a few anchor businesses. As a result, VeriSign offered a number of second-tier services with very little market share that consumed resources and operating cycles," Jon Oltsik, senior analyst at Enterprise Strategy Group, said in an email.

"VeriSign is now adopting a GE-like model, where it wants to be one of the top players in a market or get out. I like this strategy. There is plenty of upside in security services and VeriSign needs to focus in these areas, especially with IBM and HP jumping in recently," he said.

Oltsik added that Roper is "definitely putting his stamp on the business and moving forward." Roper replaced Stratton Sclavos, who abruptly resigned in May. Sclavos had led VeriSign since it was spun off from RSA 12 years ago.

In a statement released by VeriSign, Will Stofega of IDC said the company's new strategy "demonstrates a clear commitment to become a highly focused, more profitable company operating at the core of the Internet."

By divesting non-core businesses, VeriSign "will also return to its heritage, with a high-margin, recurring revenue business model that will position it for future market success," he said.

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