It's an Internet play. No, it's a telecom play. No, it's a security play. Actually,

VeriSign

(VRSN) - Get Report

is all of the above, and that's probably why many investors are so confused about the company.

VeriSign will get slightly simpler with its

sale of its shrinking retail domain-name registrar business. But putting together the remaining pieces of the VeriSign puzzle is still no easy task. It may be worth the time, though, because the company is jockeying to gain from an acronym-laced list of upcoming technology advances, including wireless-number portability, Voice over Internet protocol (VoIP), and RFID, or radio frequency identification device. There are a couple of hitches, of course: Some technologies are still years away, and the key will be execution, an area where management's record is not spotless.

"The amazing thing about VeriSign -- the reason it's the only name in my entire space that I recommend as a long-term buy -- is that there are a lot of different opportunities for it," said Wedbush Morgan Securities analyst Tim Leehealey, who has had a buy rating on the stock for more than a year. Shares of VeriSign declined 34 cents, or 2%, to close Thursday at $16.91. (Wedbush Morgan hasn't done any banking for VeriSign.)

One of the biggest sources of future growth for VeriSign stems from its often overlooked and misunderstood telephony business, which represented 39% of the company's $268.1 million in sales in the just-reported quarter. VeriSign owns the nation's largest independent Signal System 7 network, a software layer of intelligence sitting on top of the telephone system that helps set up calls between carriers. With that network, VeriSign is now handling 50% of cellular roaming traffic in the U.S. and also offers such services as caller ID.

The most imminent catalyst for VeriSign could be the Nov. 24 wireless number-portability deadline, which requires wireless carriers to let customers take their numbers with them when they switch carriers. To make WNP work, carriers will have to use a directory to determine how to properly route a call.

VeriSign already maintains a version of that directory to handle certain wireline calls and expects to do the same to handle WNP for about two dozen wireless carriers, said CEO Stratton Sclavos in a telephone interview. That should translate to new revenue in the single-digit millions of dollars in 2004 and double-digit millions thereafter, he said.

"We tend to think of these new services as singles, doubles and home runs," he said. "I would say wireless portability is a clean single."

And what's a home run? It's likely to come from offerings that combine VeriSign's business units -- telecom, security and the domain name registry, Sclavos responds.

VoIP could fit into that category by tapping the synergies between VeriSign's telecom and registry business. VeriSign sold Network Solutions' domain registrar service -- selling new domain names on the Internet. The registrar business, which became VeriSign's after the $16 billion Network Solutions sale in 2000, went for $100 million. That business has been shrinking because of more competition and an end to the Internet land rush during the dot-com boom.

But under a government-approved monopoly, VeriSign will continue to operate the registry -- or directory -- of domain names ending in .com until 2007 and .net until at least 2005. VeriSign receives $6 a year for each domain name ending in .com and .net registered and is responsible for the platform of servers that direct Internet users to the correct address.

As voice telephone calls are moved to the cheaper, more efficient Internet protocol, VeriSign wants to tap its registry and telecom businesses to become the "interoperability hub" that takes a phone number and translates it to an IP address, or determines if it still must be routed over a traditional phone line, explains Sclavos.

VoIP, however, is only in the early stages and probably two to three years away before it generates meaningful revenue, he acknowledged.

Still, when it arrives, VeriSign will incur little additional cost for building out VoIP services because it will ride off the directory infrastructure the company has spent the past three years building for the.com and .net registry, said Sclavos.

That infrastructure, called ATLAS for Advanced Transaction Look-Up and Signaling, currently handles 10 billion domain-name queries a day and is capable of handling an average of 100 billion a day and 200 billion a day at peak capacity.

"I believe we have as much as a decade lead ahead of other companies in terms of large-scale directory technology," Sclavos said. Combined with other pieces of VeriSign's business, the technology has numerous applications, the company argues. Among them:

RFID: VeriSign believes it can tap the technology to run the directory that would handle the billions of lookups of RFID tags, which Wal-Mart has mandated its suppliers to use by 2005.

Security: In the shorter term, VeriSign is analyzing patterns in the billions of DNS queries it receives to warn its security customers of breaches before they cause problems. When the Sobig virus hit this summer, VeriSign's DNS servers "went crazy" and the company was able to warn security customers early, Sclavos said.

Internet Search: VeriSign recently launched a search service called "Site Finder" that provides search results including listings paid by advertisers whenever an Internet user typed in an incorrect domain name ending with .com and .net. However, the company suspended the service, which generated $500,000 in its two weeks of service, after Internet regulators expressed concern it was resulting in instability on the Internet and rivals sued saying it represented unfair use of VeriSign's registry monopoly.

Meanwhile, VeriSign has its hands in the Internet in a couple of other ways. Its security business is working on a pilot program for members of the military to vote online in the 2004 primaries. And the company's Internet Services Group handles online payments for close to 100,000 retailers online by acting as a payment clearinghouse to a couple of dozen banks and credit card processors.

In some ways, however, stretching into so many areas has hurt VeriSign because few investors have the time to learn about and track the progress of the company's different business lines. Its story has been complicated further by acquisitions and exits, making year-over-year comparisons difficult. And some investors probably have not forgotten management's

big miss last year, which stemmed in part from a decline in the Network Solutions retail domain name business and prompted layoffs.

"Over time this company has really thrown a lot of products out in the market to see what will stick, and I wouldn't say we have a real clear leader," said Michael Sansoterra, a software equity analyst for Principal Global Investors in Des Moines, Iowa, which holds VeriSign shares. "It's still very much a show-me story."

U.S. Bancorp Piper Jaffrey analyst Gene Munster agrees, noting that buying shares comes down to an investor's time horizon. "We believe that in order for the stock to get to the next level, they need to do more than grow these little businesses," said Munster, who has a market perform rating on the stock. (His firm hasn't done any banking with VeriSign.)

That said, VeriSign's decision to shed its shrinking Network Solutions retail domain-name business is a step in the right direction, Munster added. "I think that's a sign of getting slightly more focused," he said.