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Wednesday, August 13, 2008

IAC Turns in a Loss As Two Units Struggle

Barry Diller's IAC/InterActiveCorp, which is set to split into five companies, posted a second-quarter loss because of charges for two of its struggling businesses.

The report likely is the last before IAC completes its plan to spin off four businesses into new public companies -- Ticketmaster, home-shopping network HSN, online-mortgage broker LendingTree and time-share company Interval International -- in a bid to slim down the sprawling conglomerate and boost its sagging stock price. The breakup is expected to be effective within weeks, although IAC said it couldn't pin down the precise date.

Revenue for businesses to stay at IAC, including the Ask.com search engine and dating site Match.com, posted an 11% increase in revenue, helped by a new search-advertising deal with Google Inc.

Mr. Diller on Wednesday sought to tackle a burning question for investors: what the slimmed-down IAC will do with about $1.3 billion in dividend payments it will receive from its businesses being spun off. Acquisitions are "hopefully going to be numerous" in the new IAC, he said, adding that the company is likely to keep deals below $100 million each. Mr. Diller said the company will return cash to shareholders if it doesn't find suitable deals.

The businesses to be spun off had mixed results in the second quarter. Ticketmaster and Interval increased revenue by 30% and 20%, respectively, though profit growth wasn't as strong. HSN continued its slow recovery with a 2% increase in revenue but was weighed down by its catalog business, including Frontgate and Garnet Hill, which IAC has said is being hurt by a cooling economy.

IAC took charges of about $466 million to write down the value of the HSN catalogs and Tree.com, the new name for online mortgage unit LendingTree, which continued to post operating losses in the second quarter. The charges pushed IAC to a quarterly loss of $422 million, or $1.51 a share, from a year-earlier profit of $94.6 million, or 31 cents a share. Plans for the charges had been previously disclosed.

IAC shares fell 28 cents, or 1.6%, to $17.67 in 4 p.m. Nasdaq Stock Market composite trading.

IAC and News Corp.'s Dow Jones & Co., publisher of The Wall Street Journal, jointly own a personal-finance Web site.

By: Shira Ovide
Wall Street Journal; July 31, 2008