Network Solutions shares surge on new directory service

2 min read

Shares of Network Solutions Inc. (Nasdaq: NSOL) shot up 6 5/8, or 11 percent, to 66 7/8 Thursday after announcing a new search service will be available to its customers sometime in July.

Facing competition for the first time in its core business of registering Internet domain names, Networks Solutions hopes this new value-added resource will drive sales and profits in the future.

The "dot com directory" will allow users to search its massive database of Internet domain names for a variety of purposes.

At a PaineWebber investment conference in New York, Network Solutions financial chief Robert Korzeniewski said the directory is one of the ways the company is looking to extend its leadership through additional services. Korzeniewski said the directory will leverage the company's registry database.

"We are looking to stay the leader in Internet identity services," said Korzeniewski.

Earlier this year, the government put an end to Network Solutions monopoly on the registration of domain names ending with designations such as .com, .org and .net. With five more companies now accepting registrations, including America Online Inc. (NYSE: AOL) and Register.com, some analysts worried that Network Solutions would become a fringe player.

Despite those concerns, the competition has been slow to react. Only Register.com has managed to actually begin processing registration applications and those only started this week.

But with its veritable "Yellow Pages" to the Internet, company officials have found a new way to skin a cat.

This extensive search tool will be free to Network Solutions customers. But those using competing registration services will have to pay a fee.

On Wednesday, it inked a two-year marketing agreement with Infospace.com Inc. (Nasdaq: INSP) that will combine the two companies Internet identity, content and advertising services.

InfoSpace.com will promote Network Solutions' domain name registrations services and distribute its "dot com directory" service. Network Solutions will integrate InfoSpace.com's "portal in a box" product with its registration services for customers and Internet service providers.

Last quarter, Network Solutions beat Street estimates by 2 cents a share, earning $4.8 million, or 14 cents a share, on sales of $16.5 million.

Network Solutions shares rocketed up to an all-time high of 153 3/4 ahead of its 2-for-1 stock split in March. In August, the stock was trading at only 10 1/2.

First Call consensus pegs it for a profit of 15 cents a share in its second quarter and 66 cents a share in the fiscal year.

All nine analysts following the stock rate it either a "buy" or "strong buy."