VeriSign Inc. (VRSN) recently resolved its five-year long lawsuit with Coalition for ICANN Transparency Inc. (CFIT) by entering into a Settlement Agreement and Mutual Release.
Under the agreement, both the parties dropped their claims against each other. Further, no monetary payment was required for the settlement of the dispute. This settlement also eliminated the fear of unfavorable outcome amongst the investors.
The lawsuit alleged that VeriSign had obtained the contract from Internet Corporation for Assigned Names and Numbers (ICANN) without any competitive bidding, a claim denied by VeriSign.
Based on the recent developments in the case, CFIT agreed to dismiss its claims voluntarily. CFIT filed its fourth amended complaint on February 22, 2011.
In 2010, the District Court granted CFIT’s third amended complaint, which contained new allegations regarding the .net Registry Agreement. However, Verisign's motion to dismiss CFIT's third amended complaint was granted by the District Court.
At the beginning, CFIT filed both its first and second amended complaints against the company in fiscal 2006, and both were dismissed. Later, CFIT appealed to the U.S. Court of Appeals for the Ninth Circuit. The U.S. Court of Appeals reinstated the lawsuit against VeriSign and remanded the case to the U.S. District Court.
VeriSign provides essential Internet infrastructure services to companies, service providers and website owners. The company offers a broad platform of products and services that inspire confidence among the Internet users, website owners and operators of digital networks.
The company has so far divested thirteen non-core businesses and presently has one significant business of Naming Services. It remains to be seen how the streamlined company generates a growth trajectory. Given the uncertainty around the company’s growth prospects as of now, we have a long-term Neutral recommendation on the stock.
However, the results of the first quarter of 2011 were below expectation driving Zacks #4 Rank (short-term Sell rating).
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