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Verisign to Purchase Network Solutions
thor writes, "According to CNBC, Verisign (VRSN) will purchase Network Solutions (NSOL) for approx. $21B ($531/share). Looks like the story of the day for a lot of people on and off of Wall Street. Network Solutions closed at $360 5/8 yesterday is trading up $100 in early hours trading. " I've also found the story on CNNfn. Why does this merger scare me?
Actually, our taxes n longer subsidize the USPS. It's actually profitable on its own, though I don't believe it pays taxes, which probably helps a bit. According to the financials on www.usps.gov, they made $600 million in 98 and in fact it appears they've turned a profit every year since 1995.
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Among other things, did you know that, for ordinary letters (and most other stuff too), the USPS is just about the cheapest major delivery service in the world? It's true. Yes, it's a bit slower than many other delivery services, and the utter lack of modern computerization doesn't help too much (there's a computer system in place, but it's ancient by today's standards). You certainly can't beat its price/performance; show me any other company that can deliver, say, a phone bill in three days for less than a buck, or even less than fifty cents. The last time I tried to send a letter via one of the private services, it cost me fifteen times what it would have cost via USPS, and it didn't even get there.
Private services do have their place. I use them regularly for larger packages. And I don't think snail-mail will be dying anytime soon...
For all its problems, snail-mail is going to stick around for a very long time indeed. I do wish the USPS could get its computer systems modernized (there was some talk about them doing a WebObjecdts-based intranet a while back; what ever happened to that?) But I don't see them dying, and I'm glad about that.
Now I can deal with one large, slow, incompetent company instead of two! Imagine the productivity improvements!
As the various articles have mentioned, in order to merge, the two companies first need approval from federal regulators. This may be our chance to force Network Solutions to live up to their legal obligations. As anyone who has followed the various stories about ICANN knows, NSI has been most uncooperative, even defying orders from the government. This has allowed them to maintain their monopoly, and keeps domain registration prices artifically high. However, in the approval process, companies under scrutiny often are willing to make concessions in order to be allowed to complete the deal. While I realize that this would require that there be some basis for suspicion of these two companies, perhaps the FTC could impose as a condition of the buyout that Verisign was required to cooperate with ICANN. This might not help much, but it could be one of our few chances to force NSI to open up their government-granted monopoly to the world.
Sam TH
Sam TH
AbiWord Developer
Of course, the possiblity does exist that Verisign (of whose corporate practices I know very little) will revamp NSI and make it into a company that doesn't suck, I don't think they are doing this to better humanity or anything like that. I'm sure they will make some changes to optimize NSI as a money tree, but few companies acquire others with the hope of making the customers of the acquired corp happy.
On another note, I don't really see why we all think Verisign is so trustworthy that it can tell us who to trust. I don't know how certificates work and whatnot, but can't anybody get a certificate? The purpose of a certificate is just to tell you that information you get is really from where you think it is. If getting a certificate is only a matter of money, who cares?
(note that this is not a troll, but an honest question)
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rooooar
As much as I hate "me too" posts.
So do I especially when they use a +1 bonus and contain no content or opinion.
That said what is so wrong with the merger? NSI provides domain names and Verisign provides e-commerce services and security. So it seems that the purpose of the merger is to create some sort of one stop shop for businesses to buy a domain, create an online (probably e-commerce) presence and secure it. What is so bad about this? It's not like either of the companies provide a service that cannot be obtained elsewhere so there aren't even any monopolistic overtones.
Personally I feel that the jack-of-all trades approach to doing business is very difficutlt to excel in...just ask the McAfee corporation who attempted to become such a one stop e-commerce shop only to start taking significant losses instead of focusing on their core competencies.
Think about how much money 21 billion is. You could replicate the entire US Internet backbone for less. You could replicate AOL's entire system for less. And Network Solutions provides what, after all, is a minor piece of the system. It's like a steering wheel manufacturer selling for more than a car company.
We're seeing a frantic effort by Internet bubble companies to acquire before their idiotic market caps go away. And they are going away. VA Linux, for example, continues its screaming dive down from 320. It's at 110 right now, about 1/3 of the peak last fall. They got down to 101 a few days ago. It used to be that you didn't see drops like that for anything short of a bankruptcy.
Some of the points of this definition are barriers to entry, predatory pricing, and product tying. Verisign does none of these.
Added to which, they implement an open standard for certificates that you are free to implement yourself and compete with them. Hence there is no reasonable barrier to entry - in fact - most of the hard work has been done for you by the standards authors. If Thawte did it, so can you.
As it stands, NSI will soon have to compete directly against AOL once deregulation of registrars is complete. The motivation to bulk up is obvious.
Get used to more consolidation folks - most segments of the web market now have one clear leader (Schwab, Yahoo, Ebay, Amazon, Verisign) and these companies are going to use their currency to bulk up like crazy. Its a one-time process that happens in any market to weed out the players who really have no long-term growth prospects.
Change happens folks.
Verisign is already a monopoly, with their recent acquisition of Thawte, the only real alternative for signed digital server certificates.
Network Solutions is not an equal player in the domain registration business, since they are the maintainers of the database itself.
Combine the two and you have a company which is responsible for keeping key pieces of the infrastructure of a great deal of the Internet running (DNS and SSL usefulness).
That's the reason to be scared. Show me another company which comes close to this powerhouse; you can't, because one simply doesn't exist today.
now think about it for a second. we've all heard about how the Post Office wants to make themselves relevant in the 21st century. why don't they become an offical key authenticator. they are already used to dealing with huge numbers of people and are recognized as a trusted authority with special legal rights. tampering with the mail is a federal offense. becoming a key signer is a much better way to stay relevant than by giving everyone an email address. and their trusted status would lend creedence to the internet way of doing business.
Prop me up beside the jukebox if I die.