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As company readies for split, IAC reports $46-million loss

By MARK ALBRIGHT
Published February 17, 2005

IAC/InterActiveCorp on Wednesday reported a $46-million loss as Barry Diller's e-commerce conglomerate cleaned up its books in preparation for splitting the company in two this spring.The loss, equal to 7 cents a share, was blamed on $218-million in goodwill write-downs for some of IAC's ill-fated past travel and call-center acquisitions that never panned out.

The company also revealed that its online travel business, notably Hotels.com, fell below analysts' revenue forecasts. Now it will try to reposition itself as a showcase for hotels rather than a place to book cheap hotel rooms.

IAC shares slumped 6 percent to close at $22.45 a share after the news hit.

It quickly became evident that the surviving shrunken company's renewed reliance on St. Petersburg-based HSN's cash flow will become a more familiar investment story. Diller is conveniently packaging his high-profile travel companies - Expedia, Hotels.com and Hotwire.com - to stand on their own as the online travel industry enters a new round of consolidation.

Diller led off a conference call with analysts to relay his positive news that HSN had another "solid quarter and a very good year."

"It's an indication of what happens when everything at HSN clicks," he said.

Revenues at HSN rose 9 percent to $703-million for the quarter ended Dec. 31. Operating income rose 43 percent. The number of orders shipped rose, and the percentage of items returned for a refund declined.

Diller in March will detail exactly how IAC's far-flung online travel booking businesses will be spun off from the traditional cash-flow bulwarks of the company: TicketMaster and HSN.

Diller has big plans to broaden the reach of HSN, such as America's Store, the network's second cable TV feed that's available in 15-million homes. HSN.com grew to 17 percent of the network's revenue in 2004. He also plans to create more lifestyle product lines that can be introduced on TV, then sold in far bigger selections online. HSN also has an elevated appetite for acquisitions.

HSN last month revealed that it plans to begin offering interactive ordering from a cable TV set in 2005. That means customers could buy products while they see them on TV by just clicking the cable remote.

--Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified February 17, 2005, 01:20:09]