InterActiveCorp Travels in Style

InterActiveCorp (IACI Quote) edged on to Wall Street's radar screen Tuesday, but maybe not in the way Barry Diller wanted.

The company topped analysts' financial expectations, thanks mostly to a strong performance in its online travel business. But shares of the former USA Interactive slid 4% in early trading as some investors slipped out of a stock that has been a hot performer this year.

Nonetheless, IACI's numbers reflect a strengthening hand for CEO Diller, who is attempting to build a full-service online commerce empire -- and get the kind of Wall Street valuations currently accorded to more closely watched powerhouses Yahoo! (YHOO Quote), eBay (EBAY Quote) and Amazon.com (AMZN Quote).

For the second quarter ended June 30, IACI reported revenue of $1.53 billion, up from $1.11 billion in the second quarter of 2002. The consensus of analysts surveyed by Thomson First Call was $1.47 billion.

Operating income before amortization, usually referred to by analysts as earnings before interest, taxes and amortization, amounted to $202.9 million, matching estimates from SoundView Technology and U.S. Bancorp Piper Jaffray.

"Adjusted EPS," or earnings per share excluding noncash items and one-time items, amounted to 18 cents a share, a penny ahead of the First Call number. On the basis of generally accepted accounting principles, EPS from continuing operations was 9 cents, compared to a 22-cent loss one year earlier.

Shares in IACI, which have climbed from $15.31 to as high as $42.88 over the past year, fell $1.05 to $38.45 in Tuesday morning trading.

Traveling

Key to the company's results was room-booking site Hotels.com, the majority-owned subsidiary that IACI formally acquired in June, and online travel agency Expedia (EXPE Quote), the subsidiary which IACI hopes to completely take over within a few days, pending an Expedia shareholder vote.