Speculation continued to swirl in the wake of Stratton Sclavos's
resignation as VeriSign Inc.'s CEO earlier this week, while some
industry observers pondered the dot-com veteran's legacy and
VeriSign's future.
VeriSign announced on Tuesday that Sclavos,
who led the company since it was spun off from RSA 12 years ago,
had resigned. VeriSign has so far offered little explanation for
his departure, leading to lots of guesswork. Some wondered if
the move could lead to a sale of the Internet infrastructure
company.
 | | | | | Our sense, based on some of the
digging we've done, is that there was a period of growing conflict
between the CEO and the board.
Todd Weller,
securities analystStifel, Nicolaus &
Co. |
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"A break like this makes me think, as others have pointed out,
that it might revolve around the potential sale of all or parts of
VeriSign," said Andrew Braunberg, an analyst at Current
Analysis.
Others said Sclavos's disagreements with the board apparently
fueled his resignation.
"Our sense, based on some of the digging we've done, is that
there was a period of growing conflict between the CEO and the
board," said Todd Weller, an analyst at brokerage and investment
banking firm Stifel, Nicolaus & Co. "It's not clear to me what
the exact points of tension were. Apparently this is something that
had been building up for a while and ultimately culminated in his
resignation."
But Weller dismissed speculation about VeriSign's potential
sale: "From what I've heard, the new CEO has been pretty open that
his intention is not to sell the company."
VeriSign's board of directors elected William Roper, Jr., the
board's lead independent director and former executive vice
president of Science Applications International Corp., as president
and CEO. He also served as SAIC's chief financial officer and had a
leadership role in Network Solutions from the time it was acquired
by SAIC in 1995 to its merger with
VeriSign in 2000. VeriSign sold its Network Solutions unit in
2003, but retained the unit's domain name registry business. The
company's other businesses include
SSL certificates and managed security services.
"VeriSign has a very attractive business model and is
well-positioned for long-term growth. The board and I are firmly
committed to VeriSign's business strategy and the exciting growth
opportunities in front of us," Roper said in a statement released
Wednesday.
During the next 90 days, Roper said he and the management team
will focus on driving the company's business strategy, operational
discipline, and completing its stock option review and financial
restatement process.
VeriSign is among the Silicon Valley companies embroiled in the
stock-options backdating scandal. There was speculation that
Sclavos's abrupt departure revolved around his role in the options
accounting practices, but VeriSign said Tuesday that a review of
its historical stock option grant practices by independent board
members "did not find intentional wrongdoing by any current member
of senior management, including Sclavos."
Jon Oltsik, an analyst at Enterprise Strategy Group, said the
stock option scandal may have presented a convenient opportunity
for the board and Sclavos to move on.
"He was a great fit for the initial phase of the company during
the Internet boom but really couldn't help the company diversify
its business model and get to the next phase of growth," he
said.
The executive shakeup could "set the stage for VeriSign to
increase its focus around some of its core growth businesses and
decrease its focus in some underperforming areas or low growth
business, such as telecom," Weller said.
Paul Stamp, an analyst at Cambridge, Mass.-based Forrester
Research Inc., said Sclavos led VeriSign from an embryonic stage to
essentially a holding company for many different technologies and
services.
"The last couple of years, they've been deciding what they want
to do as a company, buckling down on a couple of lines of
business," he said, adding that the challenge for the new CEO is to
expand the appeal of VeriSign's offerings "beyond the core
service-provider market."
But Alan Shimel, chief strategy officer at vendor StillSecure,
said Sclavos was a visionary who hasn't received proper credit for
his role in the early days of e-commerce. Sclavos and VeriSign, he
said, helped make the Internet what it is today by enabling it with
security.
"Could we have e-commerce without SSL certificates?" he said.
"That was VeriSign's baby."
Shimel met Sclavos when VeriSign acquired Network Solutions;
Shimel was at Interliant, a big Network Solutions customer.
VeriSign/Network Solutions also was an investor in Interliant. The
Network Solutions acquisition was a smart move that helped
establish VeriSign and see the company through the economic
downturn, Shimel said.
Sclavos "was a guy who not only rode the high of the bubble but
also rode through the crash and made it through the bad times,"
Shimel said.