VeriSign grew its revenue—and losses—during the first nine months of this year. Compared with the year-ago period, revenue grew at a faster rate than losses. (ABCNEWS.com)

E-Shopping Growth Bodes Well
Boosting that strength are strategic alliances with Cisco, McAfee Associates, Microsoft, Netscape, RSA, Security Dynamics, Verifone and Visa.
     With the increased emergence of retail sites on the Internet—Music Boulevard, E-Trade and Amazon.com, to name a few—the need for more security of credit card information and e-cash transactions will grow. VeriSign stands poised to capture much of that market.
     “The issue of securing transactions over the Internet is growing,” Taulli says. “People need to be able to trust that their transactions are safe and that the person on the other end is who they say they are. VeriSign will make money on how big this market gets.”

Big-Name Believers
VeriSign's list of investors is impressive and includes Intel, Microsoft, Visa and high-tech investment titan Kleiner Perkins Caufield & Byers, which owns an 8 percent stake.

Key Shareholders
NAME	SHARES
James Bidzos, CEO	4.7 million 28.4%
Kevin Compton, Kleiner Perkins Caufield & Byers	1.3 million 7.9%
David Cowan, Bessemer Venture Partners	1.3 million 7.8%
William Chenevich, Visa International	997,000 6%
Intel	994,000 6%
VeriFone (owned by Hewlett-Packard)	250,000 1.5%
Microsoft	100,000 1%*
*Microsoft also holds 812,500 of Series C Preferred Stock

     In addition, Hewlett-Packard subsidiary Verifone was given 250,000 shares, or 6 percent of the firm, as a settlement over alleged trademark infringement. VeriSign took a $2 million charge in the year's first nine months to cover this.
     Microsoft, which had purchased 812,500 shares of its secondary stock a year ago (it will be converted into common stock after the IPO), grabbed 100,000 shares of common stock last month in exchange for featuring VeriSign as the preferred provider of digital certificates for Microsoft customers.

Immature Industry Presents Risks
But while it sounds impressive, VeriSign comes with some risks, notably its lack of new or seasoned technology. The company is committing itself to technology that may or may not stand the test of time. Its game plan is to establish itself quickly, gain a dominant position and hope the industry doesn't change too much.
     Furthermore, despite the big-name investors, analyst Mark Brown of Market Analytics says VeriSign is fundamentally not a strong company.
     “It doesn't have any technology that is unique. It's not bringing anything special to the market,” Brown says. There's also potential competition from much larger and financially stronger firms.
     VeriSign's primary competitors are Entrust Technologies, GTE CyberTrust Solutions and IBM. It also faces additional competition from a handful of smaller companies.
     Several of VeriSign's current and potential competitors have longer operating histories and significantly greater financial, technical, marketing and other resources, as well as broader and more established distribution channels that may be used to compete head on with the company.