Barry Diller says USA Interactive ( USAI) will soon have a simpler story to tell investors.
Let's hope so. While generally impressing Wall Street with its first-quarter performance Thursday, the interactive commerce company led by Diller presented investors with a mind-boggling array of tables, footnotes and definitions that stemmed, for the most part, from the company's acquisition of the publicly traded shares of its majority-held subsidiaries. A look at all the grisly details in the earnings release -- the pro forma numbers, the adjusted numbers, the one-time charges and the nonrecurring charges -- confirms the market's conclusion that the quarter ending March 31 was indeed a good one for USA. "It's definitely been a quarter of hypergrowth," CEO Diller said on a Thursday call with analysts. But a close reading also indicates further adjustments that investors should keep in mind to gain a clearer picture of USA. Shares in USA rose $2.13, to $32.08, Thursday morning. Some of the complexity in USA's results derives from the company's majority stakes in three subsidiaries -- Ticketmaster, Expedia ( EXPE) and Hotels.com ( ROOM) -- and USA's plan, originally announced last year, to acquire the publicly traded shares in each of the companies so it would own 100% of each. The company has completed the Ticketmaster acquisition, while the completion of the Expedia and Hotels.com transactions are expected later this year. In reporting the first quarter ended March 31, the company for the first time is acting as if it already owns 100% of all three subsidiaries. While the company reported 16 cents in pro forma adjusted earnings per share -- 2 cents ahead of the Thomson First Call estimate -- it's unclear how that number was affected by the pro forma buy-ins of the subsidiaries. Restating the numbers from the first quarter of 2002 on a pro forma basis appears to have increased the adjusted EPS from 5 cents to 6. Meanwhile, some of the growth in travel services was due to a September acquisition of Interval, results from which were not included in 2002 figures. And much of the growth in electronic retailing was due to the results of Euvia, which wasn't included in year-ago figures. That being said, USA recorded strong revenue growth despite the onset of the war in Iraq. Margins dropped at Hotels.com because of increased advertising and promotion efforts, and fell at the Match.com dating site because of increased sales and marketing expense.