One more NSOL update... I hope this company runs over all those short sellers tomorrow... No significant institutional selling noticed... mostly small individual investors like us that got spooked by the Asensio report...
Reuters, Thursday, March 25, 1999 at 21:02
By Aaron Pressman
WASHINGTON, March 25 (Reuters) - Shares of Network
Solutions Inc. (NASDAQ:NSOL), the company that registers the names
of most Internet sites, dropped almost 10 percent on Thursday
following negative comments by a well-known short-seller.
Network Solutions' stock has been highly volatile in recent
weeks as investors try to sort out the value of the company's
registration business which has grown phenomenally but is
expected to face competition for the first time within the next
two years.
Shares of Network Solutions closed at $101.0625 on
Thursday, down $8.9375 in trading on the Nasdaq.
The Herndon, Va., company has registered more than four
million Internet domain names, like Reuters.com, under an
exclusive government agreement that is being phased out.
Most analysts believe the company's experience and customer
base will give it a leg up on new competitors.
But in a report issued Thursday morning, Asensio & Co. said
Network Solutions "will simply be one of hundreds of companies
with identical registration services capabilities operating in
a low price per unit, low barrier to entry, highly competitive,
small...dollar value market."
Network Solutions said Asensio's report contained "numerous
inaccuracies" and denied it had failed to disclose any material
negative information.
New York-based Asensio has prospered by selling short the
stock of companies it believes are in trouble while publicizing
its concerns. In a short sale, an investor borrows stock, sells
the shares at the current price and hopes to cover the loan by
buying back the shares in the future at a lower price.
Other analysts were far less pessimistic about Network
Solutions.
Bill Whyman, an analyst based in Washington with the Legg
Mason Precursor Group, said that while Asensio's report made
some valid points, Network Solutions was probably well
positioned to compete.
"Network solutions will lose some market share and pricing
will come down," Whyman said. "But I think they've
overdramatized the negative. Even as (Network Solutions) loses
share, the number of domain names registered is growing
exponentially."
The market is growing so fast that Network Solutions could
keep growing, in part by selling Internet users a variety of
services related to domain name registration, he added.
Network Solutions also faced complaints this week that it
improperly combined a Web site used to look up information
about who had registered Internet names with its own site that
charges $70 for registering new names.
The company always ran both sites, but the informational
site was located at www.internic.net while the sales site was
at www.networksolutions.com.
Much of Thursday's trading activity appeared to come from
small investors as less than 123,000 shares of the more tha 5.6
million shares traded changed hands in large blocks typical of
institutional investors.
After accounting for a two-for-one stock split that took
affect Thursday, the shares were down $52.6875 from an all-time
high hit on Monday.
Thursday's decline came as the overall stock market rose,
including most Internet stocks.
Copyright 1999, Reuters News Service
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