Decius wrote:
] ] Pivotal Private Equity announced today that it has signed
] ] an agreement to acquire control of Network Solutions, the
] ] world's largest domain name registrar, for $100 million.
]
] I'm a little surprised to see corporate raiders picking it
] up... These people are probably confused about its value. BTW,
] the restrictions on Verisign's contract are now totally
] different. The whole thing will need to be reworked.

.. and VeriSign can get out of its legal problem with ICANN. Its no longer a domain registrar. This is really dirty.

Rattle wrote:
] Decius wrote:
] ] ] Pivotal Private Equity announced today that it has signed
] ] ] an agreement to acquire control of Network Solutions, the
] ] ] world's largest domain name registrar, for $100 million.
] ]
] ] I'm a little surprised to see corporate raiders picking it
] ] up... These people are probably confused about its value.
] BTW,
] ] the restrictions on Verisign's contract are now totally
] ] different. The whole thing will need to be reworked.
]
] .. and VeriSign can get out of its legal problem with ICANN.
] Its no longer a domain registrar. This is really dirty.

Nick, I'm not sure that it is the case. The press release states that "VeriSign will retain a minority interest in Network Solutions and retain its registry business."

Tom, I don't think Pivotal is necessarily "confused" about the value of Verisign. My take is that the press release has a Versign spin on it. If you look at other activities of Pivotal Private Equity, this is the business they're in. According to a February press release, $100M is the top of the range in which Pivotal operates.

However, Pivotal may be getting out of its element. Here's what their CEO said: "In 1991, you'd talk about real estate and people would immediately close their minds and say, 'Forget it.' Ten years later, real estate is the darling. Our view of telecom is the same." Obviously, Mr. Najafi hasn't been keeping up on his Andrew Odlyzko readings. He says, "the outlook for long-term growth, especially from Japan, China and South Korea, is particularly strong. There’s no question that the demand for corporate communications and Internet access is growing significantly in the Pacific Rim." Yet he also says, "I believe in doing our homework and doing it well, and our team is committed to thoroughly understanding the industries and markets where our company has a presence. One of our top priorities is to truly understand the people behind a corporation because that understanding serves as a foundation for developing successful business relationships."

I found this tidbit from June 2003: "The COMMAXXESS proposal may pursue under RICO actions (in conjunction with shareholders) the recovery of certain assets that were transferred to insider parties within one year prior to the January 28, 2002 filing of the petition by Global Crossing. The shareholders also intend to initiate a RICO action regarding the Pacific Crossing Ltd entity to Pivotal Private Equity now known to be affiliated with Global Crossing creditors Goldman Sachs and certain Citigroup affiliates and subsidiaries."

Jeremy wrote:
] Nick, I'm not sure that it is the case. The press release
] states that "VeriSign will retain a minority interest
] in Network Solutions and retain its registry business."

They are keeping the registry, which is the root servers for .com and .net, but not the registrar which is the domain name registration business.

Their conflict of interest in running both the com/net registries and a registrar business is the justification for many of the restrictions on their operation of the registry in their contract, including most of the reasons cited by ICANN when they threatened to sue over SiteFinder. It remains to be seen how much that minority stake will enable ICANN to continue to justify said restrictions. I predict that this move is not coincidentally timed, that they will in fact argue for reduced restrictions on operation of the registry, and if they loose that arguement over the minority stake they will dump it and try again.

] Tom, I don't think Pivotal is necessarily "confused" about the
] value of Verisign.

Then I think you are confused about the value of NetSol. This is a business that charges 3+ times what their competitors charge for a simple service. They retain customers largely because they had first mover advantage and many businesses are too lazy to cut over to a cheaper provider, and in the off case where someone irrationally decides that they'll get "more value" from a higher priced product. As part of Verisign I think I could have made money with it. On its own I think its a goner, long term. There is MONEY here, but no growth. In fact I predict a slow contraction of this business, followed by lowered prices while the premiums are spent in marketing. They might keep it from dieing, but without new services this company is not going anywhere. They might be able to reinvest the premiums into new businesses if they got a CEO who really had great ideas. Would YOU bet millions on that? You'd be better off taking those millions and putting them into a startup.

Decius wrote:
] Jeremy wrote:
]] I don't think Pivotal is necessarily "confused" about
]] the value of Verisign.
]
] Then I think you are confused about the value of NetSol.
] Would YOU bet millions on that?

I don't think Pivotal plans/expects to recoup its investment right away. They seem to be thinking on a "decades" scale, not a "months" scale.

As a spam vehicle alone, NetSol could be worth a considerable sum. Consider the number of customers with which NetSol has an existing business relationship, and consider that they have contact information for all of them. Here's a plan. Send out 25 million emails offering a deal on a TiVo in conjunction with domain registration or renewal. Work out an exclusive arrangement with TiVo where each annual domain renewal also includes a TiVo subscription for that year. Any number of similar deals could be worked; magazine subscriptions and NetFlix come to mind. There could be a whole library of "perks" to choose from when you renew each year.

A liquidation strategy could also recover the costs. I could see a consortium of other registrars convincing Pivotal to pay $100M for NetSol. Competing registrars would then pay Pivotal a few dollars (say $4) to have each domain (of ~25M in all) transferred to a member of the consortium. These transfers would involve no out-of-pocket costs for customers. Members of the consortium could compete via electronic auction for each domain transfer.