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To: Bill Harmond who wrote (6699)	4/29/2001 6:13:56 PM
From: Mark Fowler	Read Replies (1) \| Respond to of 57684

Bill I hope Yhoo has seen the worst, i'm hearing its one of the most popular websites to date. When do you thinkYhoo earnings should start to accelerate again? i'm thinking going into 2002., 4th qtr. and on. You have anything to say about the new Ceo? I don't know much about him, but i plan to.

To: Bill Harmond who wrote (6699)	4/29/2001 6:56:52 PM
From: Mark Fowler	Read Replies (1) \| Respond to of 57684

LARGE CAP USD 46.22 VeriSign, Inc. (VRSN) Solid First Quarter Results. Business Shows Signs of Reacceleration. Summary VeriSign reported better-than-expected first quarter results. Revenue for the quarter was $213.4 million, slightly ahead of our $209 million estimate. Fully taxed operating EPS was $0.14, a penny ahead of our estimate of $0.13. The upside resulted from solid performance across all businesses. The key takeways 1) deferred revenue grew 7% sequentially over the fourth quarter - up significantly from Q4's rate 2) the renewal rate on domain names appears to be tracking well above expectations - it is still early but so far indications are promising 3) announced a $350 million stock buy back. We are leaving our forward estimates unchanged. Long-term we still believe VeriSign's leading positions at pivotal infrastructure points will provide a wealth of growth opportunities. While we are reiterating our Strong Buy we are reducing our price target to $ 100 per share as a result of changes to our DCF. The stock currently trades at 8 times 2001 earnings and 6 times 2002. Given the company's deferred revenue model and visibility even in a tough macro climate we believe that the company should trade at the high end of the software infrastructure group. Price Mkt.Value 52-Week 4/26/011 Target Div. Yield (Billions) Price Range USD 46.22 $100 - - $9.2 $214-26.25 Annual Prev. Abs. Rel. Revenue EV/ EPS EPS P/E P/E (MM) Revenue 12/02E $1.03 $1.03 - - $1,410.0 8.2X 12/01E 0.59 0.58 994.4 5.8 12/00A 0.36A 0.34E 474.8 March June Sept. Dec. FY End 2001E $0.14A $0.14 $0.15 $0.16 Dec. 31 2000A 0.02 0.08 0.11 0.13 1999A (0.02) (0.00) (0.01) (0.04) ROIC - Total Debt - Book Value/Share (12/99) $1.35 WACC (3/00) 13.2% Debt/Total Capital Common Shares 210 mil. 1On 4/26/01 DJIA closed at 10,692.35 and Nasdaq at 2,034.88. VeriSign, Inc. is a leading provider of digital certificate solutions and e- commerce infrastructure needed by public and private enterprises and individuals to conduct secure communications and commerce over Internet Protocol (IP) networks. Its wholly owned subsidiary, Network Solutions, is the registry of the largest domain names (e.g., .com, .net, .edu) and a leading provider of registration services Investment Summary VeriSign reported a solid first quarter, which we believe will start to remove some of the uncertainty from the stock. Deferred revenue accelerated to 7% sequential growth (up from 3.5% in Q4) indicating that the worst may be behind us. Additionally, the renewal rate on domain names (18 million are up for renewal this year) is tracking well above management expectations. If renewals continue to come in ahead of expectations VeriSign will easily outperform our expectations. We believe that investors should be buying the stock today given our belief that the metrics will continue to show improvement over the course of the year and the domain names business appears to have bottomed out and is starting to show normalized organic growth. Additionally, the introduction of new gTLD's could potentially act as a positive catalyst in the second half of the year. We continue to be buyers of VeriSign for several reasons: 1)The deferred revenue model offers investors excellent visibility even in a difficult macro environment. 2) The company's competitive position continues to strengthen. 3) The company's infrastructure will become increasingly valuable - the DNS system is mission critical to the operation of the Internet. And 4) VeriSign business will generate significant amounts of free cash flow as demonstrated by the $70 million in cash from operations in the first quarter. Our DCF value implies a stock price north of $100 today. Let's recap why we continue to believe VeriSign should be a core technology holding. The company has clearly emerged as the dominant PKI (or authentication) provider, and 2001 is shaping up to be the year of PKI deployment. All of the metrics in this area of the business were positive, this sector is showing no signs of a slowdown, and we believe that VeriSign's competitive dominance is unquestioned. Huge growth opportunities abound from VeriSign's essential role in the Internet's infrastructure; ENUM and WebNUM are but two sizable examples. We believe that several new business opportunities will emerge in the second half of the year - gTLD's, wireless authentication, etc. Where Do We See Uncertainty in the Near Future? We believe that this quarter's results should go a long way toward resolving uncertainty around the renewal of speculative months. April and May will have significant speculative names up for renewal so we are not totally out of the woods yet but early indications are positive. The second area of uncertainty is quantifying and tracking the upsell opportunity. On this front the company revealed some new metrics that offer some encouragement. Revenue per unique customer was up from $70 in the fourth quarter to $74 in the first quarter. Revenue per unique customer is probably the best indication of the upsell execution. We do not have much history with this metric so uncertainty still remains, but the metric moved in the right direction this quarter.. What do we do with the stock? We continue to be buyers. The stock has had a nice rally over the last few weeks, but we still view this company as a long- term core holding. The competitive landscape is improving and we believe that VeriSign's value proposition to customers (both enterprise and mass market) continue to improve. VeriSign is emerging as an Internet infrastructure gorilla. First Quarter Highlights from VeriSign's Businesses Entrprise/Service Provider Segment - 36% of revenues- The Enterprise and Service Provider Division of VeriSign's business includes Enterprise PKI, the Global Affiliate Network, B2B Payments, Corporate Domain Name Services, and the emerging Wireless Services group. In total the Enterprise/Service Provider division contributed $76.7 million to VeriSign's total revenue. PKI - Despite the weakness that other PKI vendors have experienced in this difficult macro-economic environment, VeriSign continued to see strength in new order rates, renewal rates, and sales pipeline growth. Management believes that the company's relative strength is due to businesses finding its infrastructure rather than enterprise software approach more attractive and an easier solution for provisioning their PKI solutions. VeriSign's solution moves complexity away from the customer and into the infrastructure. VeriSign's server-based model allows customers to pay only for what they need at a given time. The company continues to gain market share, in the first quarter customer adds included Ernst & Young, Co-America Bank, the Nuclear Regulatory Commission, and Deposit Trust Corp. International Affiliates - VeriSign continues to see solid traction with its international affiliates program. In the first quarter two new affiliates were added in Asia, bringing the world-wide total to 37. The company expects to add two to three additional affiliates in the second quarter, and believes that two to three of the current affiliates will expand to include payment services. The company has received requests from several of the larger affiliates to expand into additional territories or globally. In the first quarter VeriSign also announced that it had increased its stake in VeriSign Japan to 68% ownership. CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research Americas