VeriSign Exceeds Expectations, But Guidance Disappoints

Updated from 4:31 p.m. EST

VeriSign(VRSN) reported fourth-quarter results that exceeded Wall Street estimates, although revenue declined year over year due to the sale of its Network Solutions business, the company reported after the close on Thursday.

After hours, investors were focusing on the company's surprisingly weak revenue guidance for the first quarter and shares were off $1.50, or 8.4%, to $16.26. The stock shed 86 cents, or 4.6%, to $17.76 in regular trading Thursday.

Under generally accepted accounting principles, Mountain View, Calif.-based VeriSign reported a net loss of $22.3 million, or 9 cents a share, in the fourth quarter. That was down from a net loss of $39.4 million, or 17 cents a share, in the same period a year earlier. The fourth-quarter loss was primarily attributable to a restructuring charge of $43 million, the bulk of which was related to the sale of the company's Network Solutions domain name registration business, VeriSign said in a press release.

Excluding charges, VeriSign earned pro forma net income of $44.2 million, or 18 cents a share, in the fourth quarter, compared to pro forma net income of $42.2 million, or 18 cents a share, a year earlier.

Revenue fell 8.5% to $251.6 million from $275 million a year earlier, partially due to VeriSign's Network Solutions sale. Network Solutions delivered $32 million in revenue for the fourth quarter before the deal closed in November.

Wall Street analysts expected VeriSign to earn pro forma net income of 13 cents a share on $243.2 million in revenue in the fourth quarter, according to Thomson First Call.

The company told investors to expect sales of $220 million in the current, or first quarter, well under the $228 million expected by Wall Street. The company said earnings will be 13 cents a share, in line with forecasts.

VeriSign is a provider of Internet infrastructure and telecommunications services. The company also recently won a contract in the radio frequency identification device field.

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