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Rightside rejects Negari’s $5m new gTLD offer

Rightside has turned down Daniel Negari’s $5 million offer to acquire four of its new gTLDs, according to Negari.

The XYZ.com CEO told DI via email tonight:

I was looking forward to operating .Army, .Dance, .Dentist, and .Vet under the XYZ umbrella. I’m disappointed that Rightside didn’t entertain my offer, especially since I believe $5MM was more than fair. I believe these and other new TLDs are worth more to me than any other registry operator due to my growing enterprise. However, it’s understandable for Rightside to want to monetize on these assets.

Rightside has told him it had reviewed the offer and was not interested, he said.

The offer was made in a March 30 open letter to the company and Securities and Exchange Commission filing and expired last night, April 7.

There was some speculation about whether it was a genuine offer, just an attempt to boost Rightside’s share price, or both.

Negari and his COO, Mike Ambrose, own about 5% of Rightside between them, following an $8.5 million investment.

Rightside’s ability to grow revenue from its new gTLD portfolio has become the focus of attention due to the intervention of activist investor J Carlo Cannell of Cannell Capital, who reckons the company is paying too much attention to rubbish TLDs at the expense of its profitable registrar businesses.

Negari thinks he would be able to grow .army, .dance, .dentist, and .vet.

The largest of those gTLDs is .vet, with about 5,200 names in its zone file. It grew by 794 names in the last 90 days.

The other three are below 3,000 names, and are either shrinking or adding fewer than 10 names per day.

XYZ.com’s second-tier portfolio strings, such as .college, .rent and .theatre, are faring a little better, at least in terms of growth. But they are a little younger, and none are over 10,000 names.

Rightside offers $10 renewals on premium names

Rightside is to run a promotion that will discount renewals on premium names down to .com prices.

From May 16 to June 30, if you buy any of the domains that Rightside has marked as premium — except the super-premium “Platinum” names — the wholesale renewal fee will be just $10.

Registrars will mark this up according to their own pricing models.

Normally, the price you pay at the checkout is the price you pay every year after that.

The deal is overtly targeted at domainers.

Rightside said: “At these reduced prices, you’ll have more time to find the right buyer for any domains you register, and incur lower fees to transfer to them once you do. If you’re looking to add high-quality domains to your portfolio, this will be the time to do it.”

The reduced renewals only apply to names registered during the six-week window, but they do pass on to subsequent registrants if the domain is sold.

Rightside is calling it a “first-of-its-kind” promo, but in reality it’s just a temporary regression to the once-standard industry model.

Remember, prior to the 2012-round gTLDs, only exceptions like .tv charged premium rates for renewals.

Premium renewals are now very commonplace, but are by no means the rule, in the new gTLD industry.

For Rightside, the offer means the company may experience a brief cash windfall as domainers, who generally hate premium renewals, take a chance on the registry’s names.

There’s also a potential marketing benefit to be gained from having more domainers on board as unpaid salespeople.

But it does rather suggest the premiums are not flying off the shelves at the rate Rightside wants.

The company recently disclosed that in the first few months of the year it made revenue of $674,610 selling 1,820 premium names, leading to an average price of $372. Twelve five-figure names had been sold.

Over its portfolio of 39 gTLDs, Rightside has flagged over 964,000 as premium, or about 25,000 per TLD.

Schilling agrees with activist Rightside investor

Uniregistry boss Frank Schilling agrees to a large extent with the fellow Rightside investor who was revealed today to be threatening a boardroom coup at Rightside.

Schilling, who is believed to have paid $8.4 million for 6.1% of Rightside, told DI tonight that he believes Rightside’s management has not done a good job over the last few years.

He said he agrees with 7.32% shareholder J Carlo Cannell, who says that Rightside should get rid of some of its weaker new gTLDs.

Cannell, of Cannell Capital, is demanding Rightside lay off one in five of its staff, dump its weakest new gTLDs, and refocus the company on its eNom registrar business.

He’s threatening to launch a proxy fight at the company in order to replace the Rightside board of directors with his own slate if management does not do what he wants.

Cannell’s letter called out .democrat, .dance, .army, .navy, and .airforce as “irrelevant” or “garbage” gTLDs in Rightside’s portfolio that should be sold or simply “abandoned” in order to focus on its better gTLDs, such as .news, and its cash-generating registrar business.

Schilling told DI tonight that he agrees with Cannell, at least partly.

He said that if Cannell’s proposal for the company is good for shareholders and the company he would support it.

It may sound counter-intuitive for Schilling, one of the most ardent proponents of new gTLDs, to support somebody encouraging Rightside to invest less in marketing its new gTLD portfolio.

After all, Uniregistry has a couple dozen new gTLDs — including .sexy, .christmas, .pics and .link — in its stable

But Schilling has form when it comes to advocating portfolio rationalization.

Today he pointed to comments he made on a DI article in December

“Operators may make the decision to give away or sunset unprofitable strings,” he said in those comments. “I don’t view that as such a bad thing.”

Schilling said that weaker strings should be “bootstrapped” rather than aggressively invested in.

One of Cannell’s beefs with Rightside is that the company is focusing too much on new gTLDs. He’s not opposed to new gTLDs in general — in fact, he likes them — but he wants Rightside to put money only into those gTLDs he considers worthwhile.

Cannell also wants Name.com rebranded to eNom and moved to Rightside’s Seattle headquarters, for two of its directors to be replaced and for 20% of Rightside’s “weakest” staff to be laid off.

I asked Schilling whether he agreed with Cannell that that 20% of Rightside’s staff should be let go.

He said: “I do not think it is healthy to name arbitrary numbers but I do think some wrong people are in the wrong seats.”

Schilling also said that he believes Rightside has been “subservient” to Donuts, and has given Donuts too much for too little.

Donuts is the portfolio gTLD registry play that uses Rightside as its back-end registry provider.

Donuts has a much better portfolio, in my irrelevant opinion.

Another notable investor in Rightside is XYZ.com CEO Daniel Negari and his COO Michael Ambrose, who collectively invested roughly $8.5 million in Rightside at around the same time as Schilling and Cannell bought their stakes.

Like Schilling, they’re an obviously pro-new-gTLD play. I’ve asked Negari for his opinion on Cannell’s letter and will update should I ever receive a response.

Activist investor slams Rightside over “garbage” new gTLDs, looking for blood

A hedge fund manager known for causing trouble at the companies he invests in has savaged Rightside, saying its focus on new gTLDs at the expense of its registrar business is ruining the company.

J Carlo Cannell of Cannell Capital is looking for some serious bloodletting.

He wants Rightside to cut 20% of its staff, close offices, unify its products under the eNom brand and replace two of its directors.

He’s threatening to wage a proxy war to replace the Rightside board if he doesn’t get what he wants.

He wrote a scathing letter to Rightside chair Dave Panos last month, which was published in a Securities and Exchange Commission filing today.

NAME’s registrar has become like a crazy aunt kept in the basement, one that you refuse to adequately clothe or feed, but who steadfastly spins straw into gold used to subsidize a stable of largely substandard new GTLDs such as .democrat, .dance, .army, .navy, and .airforce. Most of these new GTLDs are irrelevant and will never be sold in material volumes. NAME is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better.

NAME is Rightside’s Nasdaq ticker symbol.

Cannell revealed he owned a 7% share of Rightside last month — paying reportedly just shy of $11 million for 1,389,953 shares.

He wants Rightside to sell off “or even abandon” some of its weaker gTLDs, which “should not consume all the resources of our Company at the expense of the assets that are currently profitable”, while keeping “gems” such as .news.

His letter doesn’t pull any punches.

Cannell is perhaps best known for his widely publicized tussle with Jim Cramer, TV show host and co-founder of financial news site TheStreet.

Rightside moves into China too

Kevin Murphy, February 15, 2016, Domain Registries

Rightside has become the latest gTLD registry to open up in China.

The company said today it has created a Wholly Foreign-Owned Enterprise, basically a local subsidiary, in the country.

This is the same beachhead in China taken by Minds + Machines and Famous Four Media recently.

Draconian Chinese government regulations on domain registries and registrars require formal accreditation before domain names can be used by Chinese citizens.

Opening up a local office or working with a local proxy appear to be requirements to obtain this accreditation.

Rightside points out that 45% of new gTLD domain names — 5.4 million — are registered in China. Its own portfolio has seen 90,000 of these.