Proposed Amendment to .COM Registry Agreement guarantees VeriSign at least $6 Billion in FREE CASH FLOW! Outrageous!!!
We have reached the point where this non-bid contract is simply too lucrative for VeriSign (or any other company to operate without intervention.) Extremely disappointing ICANN does not have any desire to fix the situation. ICANN should act in the best interest of the global stakeholder community....yet they seem to put VeriSign's interest ahead of everyone else. Why?? Is it because ICANN receives an estimated $32 million in fees from VeriSign per year ($0.25 for each .com registration?) If money is flowing from VeriSign to ICANN, is this a conflict of interest and should a neutral party be negotiating? This same situation happened back in 2012. ICANN's board recommended to the NTIA the contract be extended for an additional 6 years with a 7% price hike in 4 out of 6 years. But the NTIA stepped in and said the contract was too rewarding and took away VeriSign's ability to increase prices. In 2012 there were approximately 100 million .com domain names. Now in 2016 we have more than 127 million .com domains. But it does not cost any more money to operate the registry. Is anybody paying attention to VeriSign's extraordinary financials? Does ICANN or anyone else truly understand how enormously profitable this contract is with the current $7.85 .com pricing? Over the past 4 years, VeriSign generated: - $3.908 billion in revenue - $2.316 billion in Non-GAAP Operating Income - $2.705 billion in cash flow Furthermore, VeriSign is buying back its stock at an unprecedented pace, having spent $2.503 billion in the last four years alone. The current stock repurchase plan allows VeriSign to spend $1 billion more. Simply put, VeriSign is using almost all of the cash from operations and buying its stock rather than re-investing into operation of the .com registry. Not to mention VeriSign currently has $2.0 billion in cash and cash equivalents on its balance sheet. Most importantly, VeriSign continues to grow its margins with economies of scale. For full year 2016, VeriSign guided towards 62.5% to 64% Non-GAAP Operating Margins, up from 58.5% in 2013. To further prove margin expansion, in 2015 VeriSign spent the lowest amount ever on Capital Expenditures and R&D combined. These amounts are expected to be even lower in 2016 and beyond. For full year 2016, VeriSign will generate just shy of $700 million in free cash flow! THIS YEAR alone -- for only 2016! ......... $700 million in FREE CASH is an unbelievable amount of money! At the cost of the global community. Imagine how much free cash flow will be generated in 2017, 2018, 2019, 2020, 2021, 2022, 2023, and 2024? More than $6 billion in free cash flow! FREE CASH dropping to VeriSign's pockets. If VeriSign is awarded this proposed contract extension through 2024, the amount of money is astronomical. Why is ICANN not doing anything about this???? How is this fair? Why is nobody looking out for the global stakeholder community and forcing an immediate price reduction for .com domains? Why is this sweetheart contract which benefits both ICANN and VeriSign not being put out to a competitive bid? Why is there any need to get this contract renewed today? The contract for .com should be put to a competitive bid, or VeriSign should be forced to adjust its prices to reflect what is reasonable. Donald Smith