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WEB HOSTING NEWS

GoDaddy Prepares to Go Public
By: Terri Wells
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    2006-05-17

    Table of Contents:
  • GoDaddy Prepares to Go Public
  • A Look at GoDaddy and the Market
  • A Lot More Than a One-Trick Pony
  • So is GoDaddy Worth it?

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    GoDaddy Prepares to Go Public - A Look at GoDaddy and the Market


    (Page 2 of 4 )

    GoDaddy has been growing faster than all the other domain name registrars for more than a year now. It recently passed Network Solutions in the total number of domains registered. Given how many registrars there are, GoDaddy holds an impressive concentration in the business as well. One estimate states the company manages about 20 percent of the tens of millions of domain names on the web.

    And this is emphatically a growing business. VeriSign reported last month that domain name registration is increasing at a rate of about 30 percent. In part, this is a function of the domain name speculation you might have heard is going on. It works like this: users buy domain names, then populate the names with ads before even putting any content on the site. They get a certain period of time for which they can hold the domain name, then get a refund if they decide they don't want it. That lets them see how well the ads on the site perform; if the name isn't commercial enough, they can turn it back in and get a refund.

    But that doesn't account for all of the new registrations by any means. The web has become a populist medium, with millions of people sharing their thoughts in blogs. According to Technorati, the number of blogs doubles every five and a half months. By this time last year, it had reached more than 14 million. And many if not most of these blogs call for their own domain names. Is it any wonder the domain name market is taking off?

    So is GoDaddy making the right move by tendering an IPO? Let's compare it to some of the other companies in this field. Toronto-based Tucows leaped onto the American Stock Exchange last summer, and its shares are holding fairly steady at $1. It made $2.8 million on sales of $48.5 million last year, a profit margin of less than six percent. But of course it doesn't manage as many domain names as GoDaddy.

    Meanwhile, both Register.com and Network Solutions have gone private within the last three years; the first was purchased for $200 million, while the second commanded a price of $100 million. These numbers are worth keeping in mind, because some analysts say that GoDaddy's IPO could value the company as high as $250 million. That may seem a little high, until you realize how much GoDaddy actually does.

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