This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

IAC Travel Units Are Going Nowhere

IAC/InterActiveCorp's (IACI - Get Report) travel business is on a journey, but Wall Street is increasingly unsure about its final destination.

While $218 million in writedowns caught attention at Barry Diller's e-commerce giant in the fourth quarter, sell-side analysts appeared more concerned Wednesday about weaker-than-expected sales growth in IAC's travel operations. IAC is planning to spin those businesses off into a separate company later this year.

Additionally, IAC indicated that its lodging business, which disappointed investors with its performance in prior 2004 quarters, is in the midst of a fundamental repositioning. In place of its tradition of presenting itself to consumers as a source for discounted hotel stays -- a strategy that's increasingly difficult to follow through on given the challenges of competition and inventory acquisition -- is now in the process of emphasizing its role as a trusted, objective adviser for travelers in the market for a hotel room.

"A purely price-based positioning no longer makes sense," IAC Travel CEO Dara Khosrowshahi told analysts on a conference call Wednesday. Positioning as a hotels expert, on the other hand, is "powerful and ownable," he said.

While outsiders noted that IAC's core nontravel business -- the HSN home shopping operation -- performed strongly, Wednesday's glimpse of the travel business apparently has investors still waiting and seeing before they express definitive confidence in the long-term growth and profitability of the operations.

IAC's shares dropped $1.42, or nearly 6%, to trade at $22.58.

"The issue is that IAC Travel topline growth slowed considerably," wrote Goldman Sachs analyst Anthony Noto Wednesday morning.'s fourth-quarter gross bookings declined 4% year over year, he noted, "which is concerning." Noto has an in-line/attractive rating on the stock, for which his firm has done recent investment banking.

"We believe that execution challenges still exist for IAC that create uncertainty in the sustainable growth rate of the overall company," Noto wrote.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
IACI $67.16 -0.46%
AAPL $124.25 -0.14%
FB $81.66 -0.67%
GOOG $542.56 -0.99%
TSLA $187.59 -0.63%


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs