VeriSign, following IAC, to sell off units

VeriSign Inc. has become the second Internet conglomerate in as many weeks to signal its intention to break off peripheral business units and focus on its core technologies.

Reflecting the difficulty of unifying disparate Internet technologies under one roof, the Mountain View, Calif.-based company’s streamlining move, announced Wednesday, comes 10 days after media mogul Barry Diller’s IAC/InterActiveCorp announced it will split into five companies, each with a publicly traded stock.

Both IAC and VeriSign want to whittle down their operations to placate investors who are disenchanted with expansions that have cast the companies into markets far afield from their primary missions -- and weighed down their stock.

The volatility in their far-flung Internet businesses has made it hard for investors to gauge the growth prospects of both parent companies, their executives said. Overseeing a variety of technology firms can also suck engineering and other resources away from more profitable business divisions.

Some VeriSign investors worried about the nearly $1.5-billion acquisition spree that started in 2004 under former Chief Executive Stratton Sclavos, who abruptly resigned in May for undisclosed reasons after 12 years as CEO. The spending was seen as unfocused and excessive.

VeriSign and IAC are trying to convince investors they can thrive as smaller companies. In VeriSign’s case, it seems to be working: The company’s shares rose 55 cents to close at $33.70 on Wednesday.

Sterling Auty, an analyst with J.P. Morgan Securities, said in a note to investors Wednesday that because of the decision to sell off a still-unspecified number of business units, VeriSign’s “long-term growth and profitability could be a bit better than people thought.”