We recently reiterated our Neutral recommendation on VeriSign, Inc. (VRSN). VeriSign provides essential Internet infrastructure services to companies, service providers and website owners.

Earnings estimates for 2011 have more or less been static in the last 30 days as the company reported roughly in line results for the fourth quarter. The current Zacks Consensus Estimate for 2011 is $1.33, down by a penny in 60 days.  Nevertheless, estimates for 2012 have increased by 4 cents in the same amount of time.

Commenced in late 2007, VeriSign successfully completed all of its planned divestitures and the winding-down of all of its non-core businesses. In order to focus on its core competencies of providing highly-scaleable, reliable and secure Internet infrastructure services to customers around the world, the company divested all of its 13 non-core businesses.

In 2010, VeriSign announced an approximately $300 million new initiative called “Project Apollo” to meet infrastructure challenges expected over the next decade. This project is designed to further fortify infrastructure to repel significant distributed DDoS attacks and provide enhanced monitoring and logging capabilities. In 2009, VeriSign completed its prior infrastructure initiative called “Project Titan,” a three-year large-scale infrastructure upgrade that included the deployment of a new operations center as well as regional resolution sites.

The company has a healthy cash balance thanks to recent divestitures and is making efforts to return the same to investors. VeriSign recently announced an additional authorization for share repurchases of approximately $1.1 billion, which brings the total amount authorized and remaining under the plan to $1.5 billion. An accelerated buyback of shares will lead to a lower share count, which in turn will boost the bottom line. Most recently, VeriSign announced a special cash dividend of $3.00 per share of its common stock, or $518 million.

We would like to wait and watch how the much stream-lined company forges a growth trajectory ahead. Given the present uncertainty around the company’s growth prospects, we maintain our Neutral recommendation on the stock.  Our Neutral recommendation is supported by a Zacks #3 Rank, which translates into a short-term Hold rating.

 
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