IAC/InterActiveCorp said Tuesday it swung to a fourth-quarter profit, bolstered by the sale of a 30 percent stake in a Japanese TV shopping company. But the Internet services company could not escape the recession _ its adjusted earnings and revenue missed analysts' expectations.
IAC, headed by billionaire Barry Diller and including Web properties such as dating Web site Match.com, earned $227.4 million, or $1.57 per share, in the quarter. This compares with a loss of $369.9 million, or $2.53 per share, in the same quarter last year.
IAC said its earnings include a benefit of $242.5 million from the $493 million December sale of its stake in Jupiter Shop Channel. This amounted to $1.67 per share.
When excluding the Jupiter benefit and $26.4 million write-down in the value of the company's investment portfolio, IAC earned 18 cents per share _ 2 cents lower than what analysts surveyed by Thomson Reuters expected.
IAC's revenue fell 7 percent to $351 million, missing analysts' expectations of $367.8 million.
Ross Sandler, an RBC Capital Markets analyst, said the results weren't surprising, though.
"Net-net it's a modest miss, but nothing disastrous here," he said.
The company's media and advertising unit _ which includes search engine Ask.com _ reported revenue sank 19 percent to $183.7 million. IAC said this was due in part to the removal of toolbars and search boxes from a variety of non-IAC sites as it moves to place them mostly on its own Web sites.
IAC also said that fewer searches were performed at proprietary Web properties such as Ask.com and at Fun Web Products sites. It attributed the drop in Ask.com searches to lower marketing spending.
IAC said revenue per search rose overall at its proprietary Web sites, but revenue per search at Ask.com dropped. The company attributed this to users clicking fewer times during visits to the site as they were able to find what they wanted more quickly in the wake of Ask.com's relaunch in October.
Sales from the company's Match unit, which includes the Match.com and Chemistry.com dating Web sites, dipped 3 percent to $88.1 million. IAC cited a 21 percent decline in revenue per subscriber in its international markets that stemmed mostly from strengthening of the dollar, which lessens the value of sales in other currencies.
The number of Match's paid subscribers rose 5 percent to 1.3 million.
IAC reported growth in two areas _ its emerging businesses and ServiceMagic units. Revenue from emerging businesses, which includes Web sites such as ShoeBuy and Gifts.com, increased 19 percent to $54.6 million. ServiceMagic, which runs Web sites that match homeowners with home-improvement contractors, reported sales rose more than 15 percent to $25.3 million.
For the full year, IAC reported a loss of $156.2 million, or $1.08 per share, compared with a loss of $144.1 million, or $1.01 per share, in 2007. The company's revenue climbed 8 percent, totaling $1.45 billion in 2008.
Sandler, the RBC analyst, noted that IAC generated $44.4 million in free cash flow in 2008, and he's curious if the company plans to buy back shares, issue dividends or perhaps use some of the cash for acquisitions.
"If they're pro-share buyback and cautious around acquisitions, then the stock's likely to react positively to that," he said.
The fourth quarter was the first in which IAC operated alone. Previously, it was part of a larger conglomerate that split into five publicly traded companies in August.
IAC does not issue guidance.
