Last Call: VeriSign shares drop after CEO change
NEW YORK—VeriSign Inc. shares sank Monday in the first trading day after the company said William A. Roper resigned as chief executive and that its founder and first CEO, Jim Bidzos, would take over in the interim as it searches for a new head.
The shares fell $3.49, or 9.5 percent, to $33.25. In the past year, the stock has traded between $27.77 and $42.50.
VeriSign, which runs some of the Internet's core systems, said Thursday that Bidzos would replace Roper, who resigned from the company and its board on June 30.
Roper had been chief executive and president for slightly over a year.
VeriSign made the announcement on Thursday after the close of an abbreviated trading session ahead of the July 4 holiday.
During a conference call Thursday, Bidzos said that Roper's departure was voluntary, and that VeriSign's board is searching for a leader who can "guide the company through its next growth phase."
Until such a person is found, he is committed to making sure the company continues to follow through with its strategy, he said.
VeriSign, which has been planning to divest its noncore operations, still intends to do so. Bidzos said during the call that while the divestiture process is not facing "the best market conditions in the world," VeriSign expects to be "substantially on track" by the end of the year with its plans.
In a client note late Thursday, Goldman Sachs analyst Sarah Friar, who rates the stock "Neutral," said Roper's resignation may indicate VeriSign's plan to divest its noncore operations "is struggling."
Friar added that the recent departures of Chief Financial Officer Bert Clement and Corporate Controller Debbie Tuck may add "headwinds to the divestiture process" and increase "day-to-day execution risks" for VeriSign.
And in a Monday note to investors, Stifel Nicolaus & Co. analyst Todd C. Weller said that he is concerned by recent senior management turnover, which makes him wonder if there are deeper issues at the company.
"However, at the same time, we are cognizant that VeriSign is a company in transition and we think that on the whole the change that has been occurring at VeriSign has been and will likely continue to be for the positive," he said.
Weller said investors should see any drop in the share price as a buying opportunity, and reiterated his "Buy" rating and $50 price target for the stock, implying upside of 36.1 percent over its closing price Thursday of $36.74.
The analyst also said that while the timing of the CEO departure was "awkward" and surprising, VeriSign's "overall behavior was not indicative of a company looking to 'sweep one under the rug.'"
