NEW YORK (CNNfn) - Internet domain-name registrar Network Solutions on Tuesday said the U.S. Justice Department's antitrust division has formally closed an investigation of the company.|
The investigation, started in June 1997, centered on the company's management of a database of the Internet's primary domain-name system, through which the familiar dot.com, dot.net and dot.org Web site suffixes are administered.
Until last fall, Network Solutions (NSOL: Research, Estimates) had claimed exclusive rights to the database, collecting annual registration fees from anyone who wished to establish a Web site under one of those domain names.
In November, Network Solutions sealed an agreement with the Internet Corporation for Assigned Names and Numbers, or ICANN, a non-profit oversight group, to open its business to more than 80 companies around the world.
At present there are 98 accredited Internet domain-name registrars, including Register.com and America Online (AOL: Research, Estimates).
In heavy-volume Nasdaq trade Tuesday, Network Solutions shares surged nearly 15 percent, finishing 32-7/16 higher at 249-5/16.
Some market observers attributed the rise in share prices to the company's prospects after its secondary offering of stock in December, as opposed to the announcement that the Justice Department has dropped its investigation.
Network Solutions filed for a secondary offering of 7.73 million common shares, which would bring the total number of shares outstanding to 69.8 million.
"The agreement reached with ICANN really had removed whatever regulatory cloud had hung over the company," David Scharf, an analyst Bank of America Montgomery in San Francisco, told CNNfn.com.
"I think today's announcement was not a major catalyst," Scharf added. "Even though the headline reads very well, it probably had not been on the forefront of the minds of investors as a real issue."
The company's marketing efforts for the IPO, combined with a generally bullish tone in the market for tech stocks on Tuesday, probably played a larger role in the advance of the stock, Scharf said.
"With the combination of those issues and a strong day in the market, a 10 percent to 15 percent swing in the stock is not at all unusual by historical standards, given its volatility," he said.
In January, Network Solutions said that it had added more than 5 million new Internet domain names in 1999, bringing its total number domain name registrations to 8.1 million.