Yes, VeriSign CDN Business Is Indeed on the Block

William Roper Jr., the new chief executive officer of Mountain View, Calif.-based VeriSign, wants to streamline the company by selling off non-core businesses. His plan — sell or shut down, something I first reported back in August. At the time, VeriSign had no plans to sell off its content delivery network business, but it seems like things have changed.

Roper Jr. recently outlined his plan for Wall Street analysts and investors. His presentation prompted Dan Rayburn to do some digging and report that VeriSign’s Kontiki CDN business was up for sale as well, with Limelight Networks as one of the potential acquirers.

While VeriSign stated that it would review its content delivery offering over the next six months and decide whether or not to keep it, the CDN business is already being shopped around to other CDNs and content companies who many want to own their own network.

While I have been able to confirm that the Kontiki business is on the block, I have come up empty-handed on the identity of a likely buyer. Kontiki is based on peer-to-peer technology and could be a good fit for any number of CDN operators out in the market. A source familiar with VeriSign told me that the reason this business is up for sale is because the company realizes that CDNs are a highly competitive business, and it would need a lot of money to compete with powerhouses like Akamai. Others, like Level 3, are taking an even more aggressive scorched earth approach, which could become a problem for some of the smaller players. (Related: CDN Madness Cometh?)

VeriSign bought Kontiki in March 2006 for around $62 million. Rayburn reports that VeriSign is going to close 2007 at around $8 million in sales, though my sources tell me that the number is actually higher. Given that Internap paid eight times projected revenues for VitalStream, VeriSign theoretically could get more than the $62 million it paid for Kontiki.