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VeriSign looking for a RealName

RealNames, the company that's been hawking a simplified Web address system, is rumored to be the next acquisition target of VeriSign.

    My 12-year-old son Vermel and his classmates, who have a history of passionately defending inanimate objects, have embarked on their second hunger strike, this time to save the Higgs boson.

    This hypothesized particle, if found, could clear up the tricky question of why matter has mass. Scientific evidence, alas, has detected little sign of the particle's existence, even after years of searching for it.

    Too bad nobody's staging a hunger strike on behalf of RealNames, the company that's been hawking a simplified Web address system these many years, to little demonstrable effect. Critics are comparing RealNames to the endangered boson, calling both of them ideas that neatly fit a theory but show scant evidence of existing in the real world.

    Now the Rumor Mill is churning with reports that RealNames will soon be swallowed up by the gravitational force of VeriSign, which has already absorbed domain name pioneer Network Solutions and has been getting cozy with RealNames through successive investments and strategic partnerships.

    Rumors of a VeriSign acquisition have circulated for years, but well-placed Skinformants say this time a deal is definitely in the works.

    "Its not cooked yet," said our Skinformant--but it will be.

    VeriSign declined to comment on the rumors. But RealNames CEO Keith Teare denied a deal was brewing, at least at this moment.

    "There is no negotiation right now between VeriSign and us for them to buy us," Teare said.

    The Rumor Mill asked Teare to clarify what he meant by "right now."

    "It's just a turn of phrase," he replied.

    Later in our interview, Teare grew more expansive and allowed that, while there "has never been a specific offer...we dream about what might happen on occasion."

    Although dreams are the stuff that rumors are made of, we're more interested in numbers.

    On the one hand, RealNames has been shrinking about as fast as VeriSign has been expanding. The keyword company is down to 100 employees from 130 a year ago, and more than 300 18 months ago. More cuts are possible in the next few months as the company continues to restructure, Teare said.

    On the other hand, Teare wields some numbers of his own to argue that the simplified Web address system is finally taking off.

    Since adopting a Network Solutions-style channel model last year, and abandoning the direct sales of RealNames keywords, the company has increased unit sales 600 percent year over year, Teare said. About 50 companies are reselling RealNames. Revenue for 2002 is expected to double from 2001, and Teare expects the company to be "cash-flow positive as early as January."

    RealNames has eight figures left of the decimal point in the bank, and that, combined with its incredible shrinking staff, makes it less desperate to sell.

    Teare said actual resolutions of the URLs-for-dummies are up to 140 million per month from 40 million per month a year ago.

    Licensing deals to foreign companies are coming along, too. China and Japan are in the RealNames bag, and deals with the United Kingdom and France--five-year, multimillion-dollar deals, according to Teare--are coming down the pike.

    All this is well and good, but Skintelligent analysis says VeriSign's interest in RealNames has less to do with the company's purported success (be it newfound or imminent) than with two factors beyond Teare's control.

    One is today's buyer's market. With current prices, say Skinsiders, VeriSign can't afford not to buy RealNames.

    Another is the general technological trend toward alternative addressing systems for tomorrow's Web. VeriSign and others in the domain name business (including Microsoft, which has a 20 percent investment in RealNames) imagine a future with a common name protocol that ties together the Internet's numerous incompatible keyword systems. Under such a naming lingua franca, everything from AOL's keyword system to the DNS system and RealNames could conceivably interoperate.

    In addition to its investments and partnerships with RealNames, VeriSign has demonstrated its appetite for new addressing systems with its September purchase of Illuminet, whose WebNum and Enum systems map phone numbers to Web addresses.

    So who cares if no one on the Rumor Mill staff has ever used a RealName, or seen one used, or heard of anyone we know using one? What do we know? We thought The Beatles were American. Geography has never been my strong suit. All I care about are your rumors.