VeriSign Sells Off Consulting Biz

AT&T Inc. (T - Analyst Report) recently announced that it would acquire VeriSign Inc.’s (VRSN - Analyst Report) global security consulting business. Headquartered in Mountain View, California, VeriSign provides essential Internet infrastructure services to companies, service providers and website owners. The terms of the deal were not disclosed.

VeriSign's Global Security Consulting Services business helps Fortune 500 companies understand corporate security requirements, navigate diverse regulations, identify security vulnerabilities, defend against and respond to attacks and reduce risks. With this divestiture, VeriSign will have disposed of all of its 13 non-core businesses. The company sold its 12 other non-core units for $750 million.

Management has decided to focus on core competencies to provide highly scaleable, reliable and secure Internet infrastructure services to customers around the world. Hence, the company divested a number of non-core businesses in its portfolio, such as communications, billing and commerce, content delivery, messaging and enterprise security services.

VeriSign plans to invest proceeds from the divestitures into its core Internet Infrastructure and Identity Services. It is also using funds to buy back shares and has already repurchased stock worth $22.6 million in the first half of 2009. Through the sale of these non-core businesses as well as disciplined operating management, VeriSign has managed to reduce its headcount by nearly 1,000 employees.

It remains to be seen how the streamlined company climbs up the growth trajectory. As the Internet spreads to mobile devices, we see VeriSign tapping this growth market with an array of value-added services. Moreover, we believe the company has substantial growth opportunities in the areas of intelligent supply chains, real-time publishing and interactive television.