Options Delay VeriSign

It reports flat sales for the quarter and offers guidance, but no detailed GAAP or non-GAAP financials.
Publish date:

Updated from 5:10 p.m. EDT


(VRSN) - Get Report

was unable to report its third-quarter earnings results on Thursday because of its

ongoing stock options investigation, which is expected to go until the end of the year, the company said.

The Internet security company reported $399.8 million in revenue for the third quarter, flat with the $399.7 million in sales in the same quarter last year. Analysts polled by Thomson First Call forecast $401.2 million in sales.

Consensus was for EPS of 24 cents for the third quarter.

The communications services division reported revenue of $203 million; the Internet services group posted $197 million in sales for the quarter.

The joint venture with

News Corp.

(NWS) - Get Report

, which

purchased a majority stake in VeriSign's

much-maligned Jamba subsidiary, should close in January.

"We believe the transaction is clearly in the best interests of our shareholders," VeriSign CEO Stratton Sclavos said on a conference call with analysts after the bell.

Jamba's technology will be the mobile commerce platform for News Corp.'s


property, he said.

Vernon Irvin, head of VeriSign's communications services unit (which includes Jamba) is also leaving the company, Sclavos added.

In terms of its domain names business, VeriSign has signed a new contract with


(Internet Corporation for Assigned Names and Numbers), which chose the company to operate the .com domain registry, through 2012.

The pact still has to be approved by the Commerce Department, which oversees ICANN.

Looking ahead to the last quarter of the year, CFO Dana Evan said revenue should range from $415 million to $420 million, and pro forma EPS will be between 25 cents and 26 cents.

Analysts forecast a profit of 26 cents a share on sales of $417.5 million.

Gross margins will be in the 64% range, and operating margins will be around 20%, Evan said.

In 2007, the company expects "solid growth in all financial areas," Evan said. Revenue should grow at a pace of 15% or more, and margins will continue to expand. Likewise, Evan said that EPS should exceed the anticipated growth rate.

Analysts project an EPS of $1.15 on sales of $1.79 billion for the full year 2007.

Shares shed 6 cents to $20.57 in recent after-hours trading.