VeriSign Sheds Unit, Pads Wallet

VeriSign(VRSN Quote) is selling off its messaging operation to mobile specialist Syniverse(SVR Quote) for $175 million, potentially spelling good news for investors.

The Internet firm announced a major restructuring plan in late 2007, outlining its strategy to boost profitability and revenue by selling off slower-growth units in communications, billing and commerce.

"Even under challenging economic conditions, we have continued to execute on our divestiture strategy through aligning with buyers with complementary strengths," said Mark McLaughlin, the VeriSign CEO, in a statement released before market open Tuesday. "We are pleased to continue making progress on our divestiture program with this latest agreement."

Last year VeriSign sold its Kontiki video content technology to MK Capital, which followed the sale of the company's analytics business unit to Globys.

VeriSign is also expected to divest its security consulting business and its M-Qube division, which specializes in mobile content , according to Todd Weller, an analyst at Stifel Nicolaus. Upon the completion of the messaging sale, VeriSign will have raised $750 million, he added.

"The completion of the divestiture could yield some incremental margin expansion opportunities and provide fuel for repurchases," wrote Weller in a note released Tuesday. "We believe that increased activity would send a positive signal not only on valuation but also on the long-term fundamental outlook in the face of the uncertainties that exist on this front."

VeriSign has faced antitrust accusations from the Coalition for ICANN Transparency, which alleges that the firm has kept domain name prices artificially high and stymied competition. A recent report from Credit Suisse, however, cast doubt on whether the legal dispute will hurt VeriSign's Internet domain business.