Asensio & Company Labels New Verisign-ICANN Deal Anti-competitive, Says Market Valuation is Unstable.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 8, 2001

Manuel P. Asensio Challenges VeriSign CEO to A Public Debate on the

Viability of VeriSign's Internet Domain Name 

Monopoly and $10 Billion Dollar Market Valuation

Manuel P. Asensio, chairman, president and CEO of Asensio & Company, a New York-based institutional investment bank specializing in corporate valuations and equity research, challenged VeriSign, Inc. (NASDAQ: VRSN) CEO Stratton Sclavos to debate the merits of VeriSign's current monopoly over the Internet domain name registry and registrar business.

The challenge was directed to Sclavos in a letter sent on Monday, May 7, 2001.

Asensio's letter specifically challenges Sclavos to defend why his company signed the 1999 agreement with the US Department of Commerce and the Internet Corporation for Assigned Names and Numbers (ICANN) for VeriSign to divest itself of the registrar business this year, if he now plans to break that agreement.

Asensio also questions VeriSign's stock price, and believes its over-valuation is the product of VeriSign's unstable monopoly of the Internet domain-name registry and registrar businesses, and a disregard for the substantial risk that VeriSign may not be able to keep its monopoly.

The primary challenge to the new agreement could very well rest on the impropriety of the ICANN Board's approval. According to its bylaws, ICANN is required to poll its constituency groups on policy matters. In this case, the relevant group, ICANN's Names Council, was given unsuitably short notice, and even then resoundingly rejected the new agreement.

Despite the inappropriately rushed nature of the consultation, and the manifest rejection by its supporting organization, ICANN's Board gave its approval to the new agreement. A challenge to the new contract could potentially succeed by citing these violations of ICANN bylaws.

Several members of Congress, including House Energy and Commerce Committee Chairman W.J. "Billy" Tauzin (R-LA), John Dingell (D-MI), Internet Subcommittee Chairman Fred Upton (R-MI) and Edward Markey (D-MA) delivered a recent letter to Commerce Secretary Donald Evans requesting a full, transparent analysis of the VeriSign-ICANN agreement.

"There is strong opinion among members of the US House of Representatives and the general public that keeping such an arrangement is anti-competitive and perpetuates VeriSign's virtual monopoly," said Asensio. "VeriSign's valuation does not reflect the substantial risk that it will not be able to keep its monopoly on the Internet domain-name registry and registrar business. This monopoly has already been challenged a number of times, resulting in renegotiations, and there is growing criticism of the VeriSign deal coming from groups in the United States and internationally. The Department of Commerce has shown no outward signs of whether it will approve or reject VeriSign's revisions to the original agreement, and we feel the company's recent posturing on this matter is an untruthful representation to its shareholders."

"The situation is made worse by the recent failure of VeriSign to disclose its financial information completely and accurately," continued Asensio. "When you look at VeriSign's real numbers, they tell a significantly different story from the rosy picture contained in their press releases. We see a slowdown in growth, not the acceleration that VeriSign is predicting. VeriSign's investors and the employees invested in pension and mutual funds holding a substantial stake in VeriSign deserve to hear Sclavos's answers to these questions."

VeriSign currently holds the rights to operate Internet domain name registries for .com, .net, and .org. In its 1999 agreement with ICANN the company was granted permission to operate these domain name registries provided it divested itself of its registrar business by this month.

Despite this impending deadline, VeriSign has shown no sign of relinquishing either its registry or registrar business. VeriSign and ICANN have now drawn up a new contract and the US Department of Commerce is set to announce its decision on Monday, May 14, on whether the contract is viable.

The new contract would allow VeriSign to keep its registrar business while maintaining control over the lucrative .com domain until 2007, with a presumptive right of renewal for another four years. In addition VeriSign would keep the .net domain until 2006, at which time it could compete for continued control over the domain.

Analysts for VeriSign have inexplicably declared that the US Department of Commerce will decide not to uphold the divestiture, though there has been no clear signal from Commerce on its decision, and any decision will likely be subject to significant Congressional scrutiny and potential challenges.

Asensio has made himself available any time of day or night this week for a lively and honest debate with Sclavos.

Asensio & Company, Inc. is a New York-based institutional investment bank specializing in corporate valuations and equity research. Asensio & Company also specializes in investigating stock promotions and publishing research on companies it identifies as grossly overvalued, as defined.

A complete documented history of Asensio's published work with securities transactions, and the firm's definition of gross overvaluation, is available on the Internet at www.asensio.com. Asensio & Company is actively engaged in short selling and advises its clients on securities it believes are overvalued.

Short selling involves a risk not associated with the purchase of stock including, but only limited to, unlimited loss and stock borrowing risks. Additional information is available upon request.

John Wiley & Sons, Inc. has published a book about Asensio & Company's short selling, "Sold Short: Uncovering Deception in the Markets." The book will be available in bookstores nationwide on May 18, 2001, or can be ordered now through the Internet at www.asensio.com.