Network Solutions tops estimates, stock soars

Network Solutions (Nasdaq: NSOL) shares stormed up 42 1/2, or 17 percent, to 298 1/2 Thursday after it easily topped Wall Street estimates in its fourth quarter.

In the quarter, the Internet domain registrar made $9 million, or 25 cents a share, on sales of $75.9 million.

The results topped First Call consensus estimates of 23 cents a share.

Network Solutions, which was initially granted a monopoly on domain registrations by the U.S. government, has used its leverage to become one of the Internet's few cash cows. In the fourth quarter, the company generated $90 million in cash and had $199 million in the bank as of Dec. 31. Following a secondary offering Feb. 8, Network Solutions will have about $850 million in cash.

The government will take part of Network Solutions' monopoly away, but the company has a big head start on rivals such as Register.com.

In November 1999, Network Solutions inked a deal with governing Internet bodies to be an accredited registrar through November 2004 with a right to renew indefinitely. The company will also operate the registry for .com, .net and .org for at least four years. If Network Solutions separates ownership of the registrar and registry operations by May 2001, its registry agreement will extend to November 2007.

Since the government tussle -- and Network Solutions' future -- were cleared up, Network Solutions shares have soared, closing Wednesday at 256. The company plans an upcoming stock split.

In the quarter, Network Solutions added 1.6 million new registrations. The company added 539,000 international registrations. Registrations were up 23 percent from the third quarter. As of Dec. 31, Network Solutions had more than 8.1 million registrations.

Other registrars registered an additional 890,000 names with Network Solutions' registry in 1999. Currently, 26 additional registrars are operational and registering domain names in .com, .net and .org.

Fourth quarter revenue was up 143 percent from a year ago and operating income jumped 160 percent.

Network Solutions said it sold additional services to 17 percent of its customers. The company has moved to provide value added services to customers that register a domain name and launched its dot-com directory in 1999. The company also has strategic pacts with the likes of Yahoo! (Nasdaq: YHOO), UPS (NYSE: UPS) Microsoft (Nasdaq: MSFT), InfoSpace (Nasdaq: INSP) among others.

For the year, Network Solutions reported earnings of $26.9 million, or 77 cents a share, on sales of $220.8 million.