Is a GoDaddy IPO On the Horizon? (VRSN, WWWW, TFSM)

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 |  Includes: TFSM, VRSN, WEB
by: Jon Ogg

I have been searching for a filing and not found one yet, but there is word out that domain hosting and registrar GoDaddy.com is looking to come public via an IPO later this year. Lehman is the name that has been mentioned as the banker, and the discussed market capitalization is expected to be up to $1 Billion. Why does this all bleed of phrases similar to "supposed to," "word," and "may"? It is because none of this has been confirmed as of yet.

Hopefully an "S-1" filing will be available soon because it will be interesting to see exactly how many customers it has and if there are any new owners not previously disclosed. If memory serves me correctly, the CEO Bob Parsons was the only shareholder as of last year. If a filing does come out we will also start to get a look at some of the profitability metrics there, which has been the point of many discussions since GoDaddy.com has such low fees for domain registration, site hosting, merchant accounts, and other services.

What is perhaps most interesting about this IPO (if it comes) is that it will shed light on an industry segment that has become very difficult and opaque in determining a fair value for each company. The industry leader is clearly VeriSign (Nasdaq: VRSN), which has been hounded publicly by GoDaddy's CEO because of some unfair monopolistic advantages that Internic has given to VRSN.

A member of my "Bait Shop" is Web.com (Nasdaq: WWWW), which was formerly known as Interland under ticker "INLD" and a name that is up over 150% since my recommendation on this last summer. This will also shed some light on Register.com, now owned by Vector (private equity); and it will even shed some light on Internet advertising solution companies such as DoubleClick (now owned by private equity), 24/7 (Nasdaq: TFSM) and others.

This looks as though it may be the second "attempt" to come public as various online news reports in 2004 and 2005 indicated that GoDaddy.com was considering an IPO. I personally have experience in using VeriSign's "Network Solutions" and also Register.com for domain registration, but I chose GoDaddy.com for the new "eventdrivenanalysis.com" site registration and other services and will end up switching any existing domains over to them in the future. Price alone was not the only determining factor, because it was the "ease of use" that the company offers to non-techie business executives.

In a Sarbanes-Oxley world it is very understandable why many companies choose to go private or remain private, but if GoDaddy.com is able to come public it will certainly be one to watch. This company is the type that could greatly benefit from being public and it would offer a huge degree of safety to its customers as it would potentially give the company vast access to the capital markets. Until its financials are public it will be difficult to do any open endorsing, so stay tuned. I have not heard back from GoDaddy.com's PR department as of yet, but it usually takes some time to get official comments from a company on information like this.