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IAC Profit Surges Amid Sales, Bookings

By Reuters
Published | Updated

SAN FRANCISCO – IAC/InterActiveCorp. (IACI) Tuesday said quarterly profit was about eight times higher than a year ago, mainly because of a large gain from the sale of stakes in two businesses.

The company also benefited from higher bookings for Expedia.com (search) -- the online travel business that the company plans to spin off next week -- and results from acquired units like Ask Jeeves.

IAC, whose businesses include the Home Shopping Network (search) and Ticketmaster, said second-quarter net profit increased to $618.1 million, or 89 cents a share, from $69.9 million, or 9 cents per share, a year earlier.

"Most segments, including travel, performed in line, but ticketing provided significant upside to our estimates driven by a strong summer concert season," Safa Rashtchy, senior research analyst at Piper Jaffray, wrote in a research note.

The profit was boosted by one-off benefits from the sale of a stake in Vivendi Universal Entertainment and a 48.6 percent stake in German quiz channel Euvia Media, which together brought it $402 million in after-tax gains.

Revenue rose 34 percent to $1.96 billion, IAC said.

The company, whose stock slipped 0.5 percent in late morning trading, is scheduled to spin off Expedia, Hotels.com and other travel-related properties next week.

Excluding Expedia, IAC's revenue rose 44 percent to $1.4 billion, while operating income more than doubled to $66.5 million.

The New York-based company, which bought Web search company Ask Jeeves (search) on July 19, already has launched a product aimed at increasing its share of the $8 billion Web search advertising market that fuels profits at Google Inc. and Yahoo Inc.

At the same time, IAC is reducing the number of search-related advertising shown on Ask Jeeves in line with the industry to improve quality. IAC said the move would cut into the company's operating income before amortization, but in the long term, should increase search volume and as a result, revenue.

"We see the next 18 months as transitional," the company's Chief Financial Officer Tom McInerney said in a conference call with analysts.

Expedia's net income rose 51 percent to $73.4 million as revenue rose 14 percent to $555 million.

IAC shares fell 14 cents to $26.63 in Nasdaq trade.