Sclavos steps down as VeriSign chief

Longtime VeriSign Inc. chief Stratton Sclavos stepped down as the company’s internal investigation into stock-options grants is nearing its end.
The Mountain View, Calif., company declined to offer reasons for the departure of Sclavos, who joined VeriSign 12 years ago. But the firm said the “substantially completed” investigation-which was launched in the wake of a stock-option backdating scandal that has ensnared dozens of technology companies-found no “intentional wrongdoing by any current member of senior management, including Sclavos.”
William Roper Jr., who has served as a VeriSign director since 2003, was tapped to replace Sclavos. The company also scotched an analyst meeting scheduled for next week until an undetermined date.
“Over the last 12 years, (Sclavos) helped establish VeriSign as a global corporation that millions of consumers and businesses rely upon every day as they interact on the world’s voice and data networks,” said Roper. “We wish him continued success in the future.”
Shares of VeriSign slipped on the news, but quickly recovered, and the stock gained ground throughout the week as analysts and investors supported Sclavos’ exit. First Analysis Securities Corp. cheered the move, saying that a front-office shuffle was overdue, and American Technology Research also endorsed the reorganization.
“Whether there are larger problems with accounting, the SEC investigation or other issues does not appear to be a concern to investors,” Rob Sanderson of American Technology Research wrote in a research note. “We think the favorable stock reaction, up 8% in two days, reflects a generally unfavorable investor opinion of the former CEO’s investment and other management decisions.”
VeriSign hedged its bets in mobile content last year, selling 51% of its Jamba subsidiary to News Corp. for $188 million. Rupert Murdoch’s company is looking to use the direct-to-consumer business to hawk ringtones, images and, eventually, mobile video to wireless users around the world. Meanwhile, VeriSign will maintain its Internet services activity as it works to grow its mobile business. And its pockets are deep enough to withstand the expected turbulence in the mobile messaging and content delivery space, according to Sanderson.
“Despite an aggressive price war, wireless messaging is on a $150-million run-rate for (VeriSign),” Sanderson wrote.
“Management believes smaller competitors are pricing close to or something below their marginal cost. This is obviously not a long-term sustainable strategy and more likely a revenue grab ahead of inevitable consolidation in the space. (VeriSign) will be a survivor and should have cost synergies with other operations, and thereby a healthy margin structure.”