NEW YORK (AP) -- Shares of Verisign Inc., which registers domain names on the Internet, rose Friday after it reported better-than-expected fourth-quarter results.
THE SPARK: Verisign earned $105.6 million, or 65 cents per share, nearly double the $53.7 million, or 34 cents per share in the same quarter a year ago. Excluding one-time items, the company posted adjusted profit of 59 cents per share.
Revenue rose 13 percent to $230.2 million.
Analysts, on average, expected 51 cents per share on $229.4 million in revenue, according to FactSet.
THE BIG PICTURE: Reston, Va.-based Verisign has a government contract to manage the databases for ".com" domain names. In November the Commerce Department cleared the company to keep doing that for another six years, but it won't be allowed to raise prices without approval.
Under its previous contract, VeriSign was guaranteed four price increases of up to 7 percent each on domain name registrations. VeriSign sought a similar guarantee as part of the contract renewal, but the Commerce Department rejected that.
VeriSign also runs the database for the ".net" and other domain names, but they are not subject to government oversight. Under that contract, VeriSign is allowed to raise prices on ".net" names by up to 10 percent a year.
THE ANALYSIS: Cowen and Co. analyst Gregg Moskowitz backed his "Outperform" rating for the stock, noting that while its price has rebounded nicely since tumbling on news of the price freeze, it still has room to grow.
Meanwhile, Stifel Nicolaus analyst Todd Weller said that with the ".com" contract renewed, Verisign is free to shift its focus toward capital structure and make changes that will allow it to boost shareholder value.
Based on his expectations for sustainable growth at Verisign, Weller said he thinks the company's shares are fairly valued, and he backed his "Hold" rating on the stock.
THE SHARES: Up $2.86, or 7.2 percent, at $42.85 in morning trading, after peaking at $42.95 earlier in the session. Over the past 52 weeks, the company's shares have traded between $32.81 and $50.15.