Prudential upgrades NSOL...NSOL monopoly intact...price tgt $188
Report: Network Solutions Monopoly
Intact Until 2000
April 12, 1999
By Brian McWilliams
InternetNews.com Correspondent
Business News
Archives
A new research report from Prudential Securities says true competition in
the Internet domain registration business may not arrive until year 2000.
In a recent report on Network Solutions, Prudential analysts Paul
Merenbloom and Aydin Tuncer write, "We find it hard to believe that the
company is likely to face any material competition ... within the coming
several quarters."
The investment firm predicts that technical issues will delay the launch of
a shared registration system, testing of which is slted to begin April 26.
The building and debugging of the feeder systems that will interface with
NSI's central domain database will require at least four months, according
to Merenbloom, who says he worked in information systems for 12
years.
Prudential also foresees legal and other policy-related roadblocks to open
competition. One major hang-up could occur shortly after April 21st, which
is when the Internet Corp. for Assigned Names and Numbers is expected to
release the names of the five registrars selected from a pool of 12
applications.
In an interview with InternetNews.com, Merenbloom said he believes the
selection process could be delayed by legal challenges.
"If you are an applicant and not selected, would you just say 'Oh well, I
tried' and leave $100 million dollars sitting on the table? Chances are you
will exhaust all reasonable avenues for appeal."
The report also questions whether large corporations such as America Online
Inc. or MCI Worldcom will enter the registration business in the future.
While such services may seem a logical extension of their current
offerings, the big players are likely to wait in the wings.
According to Prudential, "The economic upside is ... too small to warrant
early access into a space that is filled with uncertainty and controversy."
Because of these obstacles to competition, the investment firm says NSI
will enjoy a protected status at least until the end of this year and possibly
into the first part of year 2000.
"The longer NSI is in its current position, the stronger its brand name
becomes, the larger its audience, and the greater the loyalty of its
patrons," Merenbloom said.
Prudential has accordingly raised its 12-month price target for NSOL from
$125 to $188. The report also says that NSOL should be a "core holding for
Internet portfolios." |
