VeriSign To Sell Off Network Solutions Business

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VeriSign is selling off its Network Solutions business unit, but will retain a minority stake in it, the company said Thursday.

The buyer is Pivotal Private Equity, a Phoenix investor that has taken stakes in such companies as Pacific Global Crossing. Under a definitive agreement, Pivotal will pay about $100 million in cash and $40 million in senior subordinated notes for Network Solutions, which maintains the popular .com and .net domain names under contract from the Internet Corporation For Assigned Names and Numbers (ICANN).

VeriSign, Mountain View, Calif., will retain a 15 percent stake in the largest Internet domain name registrar. And, it will retain naming and directory services including DNS database management for about 30 million digital identities. That business includes the directory for .com, .net, .cc, and .tv domain names. That group, plus security and authentication services, comprise the company's Internet Services Group.

VeriSign was in the middle of a firestorm last month over its Site Finder "search service." Site Finder redirected mistakenly typed .com and .net addresses to VeriSign-controlled sites, which could help find the correct URL, but also exposed the surfers to ad-sponsored pages. Solution providers and others complained that VeriSign hijacked Web traffic for its own commercial gain. They also said unintended consequences of the move, like the fact that Site Finder made fake or bad domain names appear legitimate, ended up breaking spam filters causing floods of bad e-mail. (see story.)

The uproar got so bad that even ICANN asked VeriSign to suspend the service. After resisting, VeriSign eventually did so, but said it was evaluating its options. This week in Washington D.C., VeriSign officials hinted that Site Finder might resurface but pledged to give the community 30- to 60-day notice beforehand.

They maintained that the outrage erupting from SiteFinder was a tempest in a teapot and that the benefit users derive by being sent to a search site rather than getting an error message outweighs any disadvantages.

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