VeriSign CEO walks with vision

After a dozen years serving as the chief executive of VeriSign, Stratton Sclavos resigned on May 29, leaving some onlookers wondering why, even as longtime critics on Wall St. openly praised his departure.

The 45-year-old CEO's abdication of his leadership position at California-based VeriSign -- a technology company with a business model so diverse it defies simple definition -- produced an immediate vote of confidence in the company from some in the investment community.

Yet, at the same time, people who did business with the executive and claim to know him well contend that the predisposition toward controversial acquisitions and far-ranging business plans that led to Sclavos' push-out at the hands of the company's board, was undeniably the same vision that has allowed VeriSign to become the IT industry giant it is today.

In the company's most recently reported financials, for fiscal year 2006, VeriSign reported $US1.58 billion in annual sales.

Through its many acquisitions, including such brand names as Internet registrar Network Solutions for roughly $US15 billion in 2000, VeriSign created a business model that fused its original expertise in Web security technology with everything from network connectivity services to online domain name registrations.

Other buy-ups led by Sclavos over the years of his tenure included providers of mobile phone ring tones, online content aggregation tools, and even blog site publishing capabilities.

In many cases, Wall St. critics questioned the need for such diversification, even when the companies the CEO was buying were adding to VeriSign's bottom line.

With the executive gone, some institutional investors began calling for the firm to pare down its interests rapidly to discard many of the company's far-flung additions.

In a report published on the same day that news of Sclavos' resignation emerged, analysts at investment bank Credit Suisse First Boston noted the CEO's departure "removes a significant overhang related to investors' general view of VeriSign's senior management as a historically under-performing team."

Among the immediate benefits of Scalvos' departure would be the opportunity for VeriSign to sell off some of the "non-core assets" that the CEO had brought under the company's auspices, according to the report.

In a similar note that at least conceded that VeriSign "benefited from Sclavos' strategic vision," analysts at Wall St. stalwart Merrill-Lynch pointed out that the resignation could lead to the sale of all or parts of the company.

The investment firm also speculated that VeriSign's Board may have "viewed [Sclavos'] unbroken tenure as an obstacle to fundamental changes to the business."

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