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NBT agrees to $236m buy-out

Kevin Murphy, September 23, 2011, Domain Registrars

Following in the footsteps of larger rival Go Daddy, the UK-based registrar Group NBT has agreed to be bought out by private investors for £153 million ($236m).

NBT owns registrars including NetNames, Ascio and Indom.

The all-cash offer comes from investors led by HgCapital and represents a 22.5% premium on the company’s closing share price yesterday.

At 550p a share, the offer stands to make a profit for anybody who has bought NBT shares in the last ten years, according to the company.

The news came as NBT reported an annual profit, excluding certain items, up organically 9% at £8.9 million ($13.8m) on revenue that was up 4% at £45.7 million ($70.6m).

Including the results from French registrar Indom, which the company acquired last December, profit was up 18% at £9.6 million ($14.8m) on revenue up 13% to £49.5 million ($76.5m)

The NBT deal is merely the latest in a series of buyouts and mergers to hit the registrar market this year.

As well as Go Daddy’s $2 billion+ change of control, Network Solutions recently sold out to Web.com for $561 million in cash and stock, and Tucows acquired EPAG Domainservices for $2.5 million.

At least one city analyst thinks the buyout timing relates to ICANN’s forthcoming new generic top-level domains program, and is bullish on Top Level Domain Holdings shares as a result.

Will the wave of consolidation continue? Who’s next?

Together at last: NetSol merges with Register.com

Kevin Murphy, August 5, 2011, Domain Registrars

The first-ever .com domain name registrar and its first-ever competitor are to merge as part of Web.com’s strategy to scale up and better compete with Go Daddy.

Web.com, which bought Register.com a little over a year ago, has now turned its attention to bigger fish. It’s agreed to buy Network Solutions for $561 million in cash and stock.

The combined company will have three million customers, revenue of over $450 million, and over nine million domains under management.

By my reckoning, this means Web.com becomes the fourth-largest registrar by domain count, a position already held by NetSol, a couple of million domains behind Tucows.

NetSol was of course the original .com registrar/registry and Register.com was the first competitor to start selling domains after ICANN introduced competition to the market.

Both registrars were briefly public companies in their own right, before being re-privatized around the same time it became apparent Go Daddy and the other discount registrars were eating their lunch.

This shared history is still evident today – both companies still sell domain names for 1999 prices, and they’re both still losing customers as a result.

CEO David Brown said on a conference call announcing the deal that Register.com is currently losing 13,000 subscribers, net, per quarter.

This is not as bad as the 20,000 per quarter at the time of the acquisition, but it’s still over 140 customers jumping ship, on average, every day.

Brown said that NetSol’s churn is similar; its customer base is “declining very slowly”, albeit from a stronger starting position.

When VeriSign sold NetSol in 2003, it said the unit had about four million customers. Today, according to Web.com’s announcement, it’s closer to two million.

The NetSol deal will enable Web.com to expand its focus from small businesses, Register.com’s core market, to medium-sized businesses too, Brown said.

“This is a unique chance for Web.com to quickly gain major scale in our sweet spot – the small and mid-size business market,” he told analysts.

The larger scale will also enable the company to ramp up its marketing efforts, he said, helping it to gain mindshare from “another company” (cough–Go Daddy–cough).

Both the NetSol and Register.com brands will stay, but the primary brand in its advertising campaigns will be Web.com

Both NetSol and Register.com still operate at very much the high-end of the pricing spectrum, having stubbornly resisted pricing pressures for the last decade.

Register.com currently sells .com domain names for $38 a year, NetSol sells them for $35.

However, on the analysts’ call, Brown discussed the success of a recent marketing campaign at Register.com, which offered domains at cheaper prices than usual.

“We discovered marketing a lower-price domain name was driving a total order value that was more than ten times higher due to additional offerings,” he said.

I wonder where they got that idea from.

Register.com settles Baidu domain hijacking lawsuit

Kevin Murphy, November 25, 2010, Domain Registrars

Register.com has apologised to Chinese portal company Baidu for allowing its domain, baidu.com, to be hijacked by the Iranian Cyber Army hacker group.

The two companies have announced that the lawsuit, which alleged gross negligence among other things, has now been settled. Terms were not disclosed.

If Baidu’s complaint was to be believed, the hackers took over baidu.com with a trivial social engineering attack that relied upon a Register.com tech support employee being asleep at the wheel.

The company is one of China’s largest internet firms, employing over 6,000 people and turning over well over $600 million a year. But for the period of the hijack, visitors to baidu.com instead just saw the hackers’ defacement message instead.

The registrar had argued in court that its terms and conditions released it from liability, but the judge didn’t buy it.

Register.com, which was acquired by Web.com for $135 million in June, said yesterday:

After an internal investigation, we found that the breach occurred because Register’s security protocols had been compromised. We have worked with United States law enforcement officials and Baidu to address the issue. We sincerely apologize to Baidu for the disruption that occurred to its services as a result of this incident.

Baidu said it accepted the apology. And the check, I imagine.

Register.com sold at a $65 million loss

Register.com has been acquired by web hosting company Web.com for $135 million, substantially less than the $200 million Vector Capital paid for it five years ago.

Web.com said the acquisition will help it access new small business customers for lead generation, to cross-sell its existing products.

The company’s customer base will increase by over 400% to more than one million customers, Web.com said. The combined firm will have annual revenue of $180 million.

Register.com was one of the first five ICANN-accredited registrars. It failed as a public company, and after years of financial wrangling was finally taken private by Vector in 2005.

Vector specializes in buying up troubled companies and turning them around, but it doesn’t appear to have increased the value of this particular asset over the last five years.

AOL loses ICANN accreditation

AOL, one of the first five companies to become an ICANN-accredited registrar, appears to have let its accreditation expire.

The former internet giant is no longer listed on ICANN’s Internic registrar page, and DotAndCo.net’s data shows it lost its .com, .net and .org accreditations on April 27.

It’s hardly surprising. AOL’s profits are falling and it has been reorganizing itself ever since Time Warner returned it to life as an independent company last year.

It’s noteworthy because AOL was one of the first five registrars to challenge Network Solutions’ monopoly, when ICANN introduced competition to the domain name market in 1999.

In April 1999, the company participated in ICANN’s limited registrar “test-bed” experiment, alongside CORE, France Telecom, Melbourne IT and Register.com.

But domain names were never a big deal at the company.

AOL peaked at about 150,000 domains a few years ago and tailed off to a little more than a dozen at the end of 2009. Apparently, the company has decided to let its accreditation simply expire.

Demand Media in rumored IPO

Kevin Murphy, April 16, 2010, Domain Registrars

Demand Media, which owns number-two domain registrar eNom, could file to go public this summer, the Financial Times has reported.

Widely thought of as a “content mill”, Demand is in the business of mining search and domain data and pumping out content which it can sell ads against.

The FT, using anonymous sources, reports that an IPO, which could happen by November, would value the firm at $1.5 billion. Revenue is estimated to be around $250 million a year.

While selling domain names does not appear to be Demand’s core business, other domain name registrars have a rocky record when it comes to public listings.

Register.com, which used its early-mover advantage to IPO at the tail end of the dot-com boom, ended up going private after low-cost registrars like Go Daddy started eating its lunch.

Go Daddy itself gave the world a glimpse at its finances when it filed its S-1 back in 2006, but CEO Bob Parsons yanked the IPO at the eleventh hour, citing poor market conditions and his inability to keep his mouth shut during the traditional pre-offering Quiet Period.

Parsons said at the time that it’s hard to show a profit under GAAP as a growing registrar, due to the way registrations are accounted for.

Tucows, meanwhile, has managed to tick along quietly with a listing on the small-cap markets for years.

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