Network Solutions Stock Soars in Offering
Shares of Network Solutions Inc., the Herndon, Va., firm that has exclusive rights to assign most Internet addresses, were offered to the public for the first time Friday and surged almost 30% from the $18 opening price by day’s end.
The quick rise, analysts said, was due to investors’ confidence that the company will be able to thrive even if other firms are allowed to register addresses when Network Solutions’ exclusive agreement with the National Science Foundation expires next year.
The shares rose as much as 49% during the day, before closing up $5.31 at $23.31 in trading of 4.4 million shares on Nasdaq. The offering of 3.3 million shares raised $59.4 million for Network Solutions, a unit of defense contractor Science Applications International Corp.
“It was an excellent showing,” said Ken Fleming, an analyst with Renaissance Capital Corp., a Greenwich, Conn., firm that tracks initial public offerings. “It’s a name that a lot of investors who know about the Internet recognize.”
The offering also was aided by a recent run-up in other Internet stocks, analysts said. In the last two weeks, for example, share prices have jumped 35% for Internet bookseller Amazon.com Inc., 24% for Internet search firm Excite Inc. and 33% for online auctioneer Onsale Inc.
“We’re back in a very healthy market for Internet stocks and IPOs,” said Keith Benjamin, an analyst at Robertson Stephens & Co. in San Francisco.
Faced with greater-than-expected investor interest, Network Solutions earlier this week decided to increase the offering by 1 million shares and bump up the initial price to $18 from a $14 to $16 range.
Network Solutions is the only company in the world authorized to assign some of the Internet’s most widely used “domains,” or addresses, specifically those that end in .com, .edu, .net and .org. The company charges $100 to assign a domain for two years, 70% of which it gets to keep. (The remainder goes to an Internet development fund.)
The Internet’s phenomenal growth over the last few years has made registration a very active business for Network Solutions. As of June, the company had registered more than 1 million domains. At the same time last year, it had assigned 340,000 domains.
