The New York-based domain name registrar yesterday reported a pleasing first quarter in which it beat its projections for revenue and profit, but also warned that its second quarter will see sales flat to down sequentially, and that it may only break even.
Register reported a net income for the three months to March 31 down 46% on last year at $2m, on revenue that was essentially flat at $27.3m. Sequentially, revenue was up and the company reversed its fourth-quarter loss.
Executives said on a conference call with analysts and investors that the board of directors has not yet decided on a date for its annual shareholder meeting – a meeting at which a group of investors will try to have them replaced.
Register chairman Mitch Quain evaded questions about the latest possible date for the meeting. He said company lawyers were certainly aware of the company’s obligation to set a date. Last year’s meeting was in May, he said.
In January, Register’s board rejected an inadequate hostile takeover bid from RCM Acquisition Co LLC, a firm representing 4.2% of Register’s shareholders, led by Barington Companies Equity Partners LP.
After its rejection, Barington, which has a history of attempting takeovers of cash-rich tech companies it says are being badly managed, said it would propose a competing slate of directors at the next shareholder meeting.
Register had current assets of $214m at the end of the quarter, and one way the company may be able to extract itself from the looming proxy battle would be to launch a share buyback program. Quain said the board is evaluating ways to use the cash.
In March, Barington tried to replace the board of Keynote Systems Inc with its own slate, but withdrew the threat when, the day before its shareholder meeting, Keynote agreed to use over $71m of its $203m cash pile to buy back a third of its outstanding shares.
Register.com has been internally mulling over how to restructure for growth and profit for over six months, and executives said yesterday that it is in the midst of updating its internal systems and developing new products to those ends.
The real impact of our efforts from these projects will not be reflected in our results for some time, in fact we may increase our spending in the near-term to achieve longer-term cost savings benefits, Forman said.
Forman added that the company will introduce new value-added services this quarter, and will spend cash to market them. It will also incur startup costs associated with the launch of RegistryPro, a subsidiary that offers the new .pro domain name.
Source: Computerwire
