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February 1, 2007
MOUNTAIN VIEW, Calif. -- VeriSign, Inc. (NasdaqGS:VRSN - News), the leading provider of intelligent infrastructure for the networked world, today reported financial results for the fourth quarter and year ended December 31, 2006.
Q4 2006 Financial Results
VeriSign reported total revenue of $413 million for the fourth quarter of 2006. VeriSign ended the fourth quarter with Cash, Cash Equivalents, Restricted Cash and Short-term Investments of $749 million and deferred revenue of $614 million.
2006 Financial Results
For the year ended December 31, 2006, VeriSign reported total revenue of $1.58 billion, compared to $1.61 billion for 2005. The year over year decrease reflects a decline in mobile content revenues in the first half of the year.
"We enter 2007 with a strong portfolio of services that advances our mission of being in the center of the world's networked interactions," said Stratton Sclavos, Chairman and Chief Executive Officer of VeriSign. "We are now focused on addressing the needs of our global customer base as they transform their businesses to a next generation digital world."
"We faced some challenges to top line growth in 2006, namely the divestiture of the payment gateway business and some instability in the mobile content business in the first half of the year," said Dana Evan, Chief Financial Officer of VeriSign. "Overall, we are pleased with our results and are well-positioned for 2007 with a strong balance sheet, excellent operating cash flows and nearly $750 million in cash and short-term investments."
VeriSign is not providing detailed GAAP or non-GAAP financials for the quarter and year ended December 31, 2006 due to the previously announced review and analysis of VeriSign's historical stock option grants being conducted by an ad hoc group of independent Directors. The ad hoc group's review and analysis has been substantially completed. The review did not find intentional wrongdoing by any current member of the senior management team.
VeriSign has determined that it must restate its historical financial statements for the years and interim periods from 2002-2005 and for the first quarter of 2006 to record additional non-cash, stock-based compensation expense related to past stock option grants. Based on the findings to date, VeriSign believes the non-cash charges to the financial statements for the periods 2002-2005 will be less than $200 million. VeriSign expects to complete its restatement of financial statements for all affected periods in the near future.
During the fourth quarter, VeriSign announced that the Department of Commerce gave final approval to the .com agreement between VeriSign and the Internet Corporation for Assigned Names and Numbers (ICANN). The agreement outlines rules and processes for introducing new services while promoting the security and safety of the Internet and providing for continued investment in the infrastructure.
VeriSign also announced the issuance of Extended Validation (EV) SSL Certificates. These new certificates support Microsoft's IE7 and Vista operating system and help to increase consumer confidence when visiting Web sites by providing a visual cue, a green browser bar, that these sites are who they claim to be and that online transactions with these sites are secured by encryption.
In December, VeriSign announced that UK television broadcaster, Channel 4, integrated VeriSign's peer-to-peer solution to power its new Internet video on-demand service, making Channel 4 one of the first major broadcasters and the third large network customer for this solution in the UK. VeriSign's peer-to-peer broadband technology enables the secure delivery of Internet video, reduces the time it takes to download video content and produces a superior user experience.
Additional highlights from the quarter include the acquisition in November of inCode Wireless for approximately $52 million in cash and assumed debt. With a focus on next generation mobility solutions, inCode provides strategy consulting services to major wireless, wire line, cable operator and telecom equipment manufacturers, as well as leading enterprises.
VeriSign Inc. (Nasdaq: VRSN)
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