Go Daddy: Huge Hosting Operation For Sale?

It's not everyday that a large chunk of the Internet is placed for sale. But there are reports that the world's largest domain registrar, Go Daddy, has hired an investment banker and may be seeking a buyer. Go Daddy's huge footprint in the hosting world presents an opportunity for potential bidders to quickly acquire a huge footprint in the hosting world.

Most people know Go Daddy for its provocative Super Bowl commercials, which have helped make the company the on-ramp to the Internet for millions of small businesses and web site owners. Go Daddy manages more than 43 million domains for its 8.3 million customers.

Are the sale reports true? We asked the company. "Go Daddy does not comment on rumors," said Elizabeth Driscoll, Vice President for Public Relations.

For Many, Go Daddy = Domains
What's undisputed is that Go Daddy's edgy advertising and early-adopter use of social media has helped make its brand synonymous with domain names for many Americans. "Go Daddy is one of the pioneers that have elevated domain names into the mainstream consciousness," VeriSign CEO Mark McLaughlin said earlier this year.

In recent years the company has extended its dominance into web hosting and e-commerce. Go Daddy hosts more than 26 million web sites, making it the largest web hosting company. It has also become the second-largest issuer of SSL certificates, trailing only Symantec, which recently acquired the VeriSign SSL business. As in the domain business, Go Daddy's aggressive pricing has helped it grow faster than incumbent players.

"Go Daddy has seen consistent and steady growth since they entered the Secure Certificate market," said Mike Prettejohn, Director of Netcraft, which tracks the growth of SSL-enabled sites. "With their competitive pricing and licensing structure, we expect this trend to continue."

Go Daddy is owned by Bob Parsons, a self-taught programmer and entrepreneur. After serving in the U.S. Marines and earning a Purple Heart in Vietnam, Parsons founded Parsons Technology, an accounting software business that he sold to Intuit in 1994 for $64 million. He founded Go Daddy in 1997 and entered the domain business in 2000.

Brief Run at an IPO
in 2006 Go Daddy announced plans for an initial public offering in which it hoped to raise $200 million. The company later canceled those plans, citing poor market conditions.

At the time, Parsons also said Go Daddy's losses and financial performance had been misunderstood due to deferred revenue from products that have been paid for but not delivered, such as multi-year registrations of domain names and SSL certificates. While the sale of these products provides Go Daddy with excellent cash flow, the revenue cannot be applied to earnings until the product is delivered on its renewal date.

That may be why The Wall Street Journal, which first reported the sale rumors, is speculating that private equity firms are the most likely buyers. General Atlantic Partners owns Network Solutions, which was the leading domain registrar until Go Daddy emerged with aggressive pricing models.

One industry observer thinks Parsons may have been hinting at a decision to sell Go Daddy in a recent video blog. "We do best, and are most productive, when we have lots of time off," Parsons said in the humorous post, which focuses on the value of life beyond work.