IAC Travel Units Are Going Nowhere

IAC/InterActiveCorp's (IACI Quote) 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 Hotels.com 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 -- Hotels.com 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 Hotels.com as a hotels expert, on the other hand, is "powerful and ownable," he said. ...