Verisign and Register.com shares react to ICANN ruling

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Verisign (Nasdaq: VRSN) fell 12 percent Friday and Register.com (Nasdaq: RCOM) held steady after the Internet Corporation for Assigned Names and Numbers (ICANN) ruled how many new top-level domain names should be created.

Verisign was off 14 to 103.88, while Register.com was up 0.09 to 8 in early trading.

ICANN's decision will enable businesses and individuals to register domain names with .biz, .info, .name, .pro, .museum, .aero and .coop extensions by 2001. The decision sanctions the development of new generic domains for the first time in over a decade, which will provide customers of Register.com with competitive alternatives to .com, .net and .org domain names.

Register.com, Inc. (Nasdaq: RCOM), one of the leading domain name registrars on the Internet, issued a release saying it "applauded" the results. It will benefit from the registries for two of the seven approved proposals -- .pro through RegistryPro, a partnership between register.com and UK-based Virtual Internet and .info, as part of the Afilias registrar consortium.

VeriSign Inc. (Nasdaq: VRSN) investors weren't pleased by the ruling; the new names will compete directly with the seven existing domain names including .com, .net, and .org for which VeriSign, which purchased Network Solutions Inc. earlier this year, currently enjoys a near-monopoly position in.

Since VeriSign did not apply to be the registry this time around, its monopoly is sure to end. The stock fell nearly 30 percent late last week, briefly dipping below $100 on Monday afternoon, despite a solid third quarter report.

But analysts said that VeriSign actually has much to gain from an expansion in top-level domain names. The company actually operates two businesses: it is both a registry, holding and updating a master list of domain names, and a registrar, selling the domain names to businesses and the general public. The new names do not prevent VeriSign from acting as a registrar, leveraging its massive customer base, estimated to be around 15 million, to resell new domain names.

Friday, Verisign received a blow for its foreign domain name registration business; China has mandated that only a handful of domestic firms may assign Chinese-language Internet addresses, trouble for Verisign's registration service launched last week.

"Without prior approval, no organization or individual is allowed to manage, provide services for or act as an agent for Chinese-language domain name registration,'' said a notice from the Ministry of Information Industry, according to a Reuters report Friday.

The notice, published on the ministry's Web site, gives the China Internet Network Information Centre (CNNIC) sole authority over registration of Chinese-character Web addresses, or domain names.

Reuters contributed to this report.

• New competition for .com
• VeriSign falls despite impressive 3Q results >