VeriSign: Master of Its Domains, and a Certifiable Winner

Countrywide Financial (CFC - commentary - Cramer's Take) and the perils of subprime and alt-A portfolios have taken the bloom off "real" real estate's rose. No worries, though: Online real estate beckons, and VeriSign (VRSN - commentary - Cramer's Take) is the broker and general contractor of the Web.

The digital land rush of 10 years ago was fueled by the same kind of rash emotions that motivated the real estate boom of the last five. Reality outlasted the solvency of many investors then, as the market realized that simply having a great name like Pets.com did not automatically translate to a flourishing business. It turns out that boring ideas, such as inventory management, really do matter.

Today, the digital land game has changed dramatically. Companies such as Google (GOOG - commentary - Cramer's Take) and Yahoo! (YHOO - commentary - Cramer's Take) have made it possible for end-users to find vendors and for those sellers to advertise to a targeted base.

Amazon (AMZN - commentary - Cramer's Take) and eBay (EBAY - commentary - Cramer's Take) are both profitable marketplaces that have used search to capitalize on their retail expertise. Even Mister Softee is trying to play catch-up, acknowledging that it missed how search could index Web sites, and it is retooling its "Window Live." (I still don't get why it's not leveraging the MSN brand it just spent billions over the last few years marketing, but I digress.)

As the Internet matured and gained a critical mass of audience spending a critical amount of time and money, companies and individuals found that the Web could be monetized through search, and the Web 2.0 began to emerge. The original promises of the World Wide Web (a level playing field, instant communication, disruption of old-world forces) have become more of a reality. Personal Web sites have been resurrected in the form of blogs, which are quickly becoming a reliable source of income for many.

VeriSign has been chosen by the Department of Commerce as the solutions provider for all ".com" domains through 2012. The company essentially translates the domain names of Web sites (TheStreet.com) into IP addresses (209.67.12.134). These IP addresses are the equivalent of a computer's Social Security number and wouldn't be able to network without VeriSign.

Additionally, VeriSign runs security services that networks may contract out for, such as firewalls, virus blockers and data encryption. VeriSign also provides communication services to the telecom industry, including billing services and database management. That telecom biz has become a drag on the company, but it's not a primary driver for the stock anyway. Spinning off some of its telecom businesses would be a great catalyst.

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At the time of publication, the firm in which Willard is a partner was net long GOOG, MSFT and NWS, although positions can change at any time and without notice.

Cody Willard is the manager of CL Willard Capital Management, LLC. He is a regular guest on Fox News, CNBC and other networks, and he writes a monthly column for the Financial Times. He is also an adjunct professor at Seton Hall University and the author of TheCodyReport.net, a monthly stock market newsletter. Willard appreciates your feedback -- click here to send him an email.