Shares in Network Solutions, one of the high-flying Net stocks, jumped 20 percent in trading today after the Clinton administration released what the company called a "market-focused, evolutionary" plan to overhaul the Internet's naming system.
The shares closed the day up 6.75 at 39.25. Until today, the company's stock had been declining based on anticipation of the report. NSI's stock has traded as high as 58 and as low as 31.375 during the past 52 weeks. One reason for the run-up: NSI is profitable, and it has a head start in the domain naming game. Many analysts expect that to continue, even with the release of today's plan.
"The 'white paper' is good news for Network Solutions," chief executive Gabe Battista said in a telephone briefing, adding that is consistent with a previous government policy statement. "It allows for stability and competition to ensure that the Internet will grow."
While conceding that NSI would face competition down the road, Battista said: "No one has yet really raised their hand. We think it will not come from a major ISP or Web hosting service."
Battista also praised the white paper for being evolutionary--a sign that Network Solutions may not lose control of its role in managing the naming system of the Net's generic domains any time soon. The company's contract expires in September, but it can be renegotiated.
The white paper also proposed that a private nonprofit group be formed to oversee policy for the domain name system. "We are pleased that the administration's plan is an evolutionary, market-focused approach that recognizes the key role that Network Solutions plays in the growth of the Internet," Battista said.
The plan also offered few details for overhauling the system--another sign that the "status quo" may continue for a while.
"Network Solutions will control things for quite a while; I guess easily a year or maybe two years," said Larry Erlich, a partner in NetScott Operations, which provides domain name registry, Web hosting, and Web site design. "By then, most legitimate companies will have a domain name registered under '.com,' '.net,' or '.org.'"
Battista declined comment on the recent fluctuation of NSI's stock price.
NSI went public in September 1997 at $18 per share. Like other Net stocks, it has risen sharply since the IPO. This year alone, the stock jumped nearly 185 percent. Hambrecht & Quist was a lead underwriter.
As reported, the company also has received inquiries from antitrust regulators about its management of the domain name system, but no legal action has been taken. The company denies any monopolistic practices.
As reported in its regulatory filing for going public, NSI also disclosed that it had received a civil subpoena from the Justice Department in connection with an investigation to determine whether "there is, has been, or may be a violation of antitrust laws...relating to Internet registration products and services."
No legal action has been taken, and NSI denies any such violations.
Net editor Janet Kornblum contributed to this report.