Apr, 2002 : VeriSign Misses Expectations, Cuts Staff

📅 April 26, 2002 - Digital trust services provider VeriSign Inc. (verisign.com) announced its results on Friday for the quarter ending March 31, 2002, missing expectations and announcing its plan to lay off 10 percent of its workforce.

Revenues for the first quarter were $328 million. VeriSign says its results for the quarter reflect the acquisitions of Illuminet Holdings Inc., which closed on December 12, 2001, and H.O. Systems Inc., which closed on February 8, 2002. VeriSign's results, therefore, include all of the first quarter activity of Illuminet, and roughly two months of H.O. Systems? activity.
Pro forma net income for the quarter, excluding the amortization of intangible assets and compensation charges related to acquisitions, was $68 million, or $0.28 diluted earnings per share, says VeriSign, compared to $49 million, or $0.23 diluted earnings per share, in the first quarter of 2001.
Including the amortization of intangible assets and compensation charges not reflected in the pro forma results, the company's net loss for the quarter was $21 million.
?Clearly, our first-quarter results were not up to our expectations as we encountered significant spending delays in our IT and telecom customer bases, particularly in the last few weeks of March, as well as more severe challenges in our Mass Markets domain name business,? says Stratton Sclavos, chairman and CEO of VeriSign. ?However, even in this difficult environment, we were pleased to be able to generate meaningful pro forma net income, expand our service offerings and advance our overall strategy through a global alliance with IBM and the introduction of our digital trust services framework.?
VeriSign also announced plans to restructure its operations, including the recently acquired Illuminet Holdings and H.O. Systems. The restructuring, says VeriSign, will result in a layoffs of about 10 percent of the company's sales, marketing and administration workforces.
VeriSign anticipates charges of approximately $70 to $80 million as a result of the restructuring, including both employee severance, lease and contract terminations and write downs of certain property and equipment.
?With a solid core business in place, VeriSign is now realigning and integrating all corporate functions to most efficiently execute on our strategy. With the economic outlook still uncertain, it is particularly important for us to take these difficult but necessary steps,? says Dana Evan, chief financial officer of VeriSign.