Liberty Interactive Corporation ( LINTA) Q4 2011 Earnings Conference Call February 23, 2012 11:00 am ET Executives Courtnee Ulrich – Vice President, Investor Relations Gregory B. Maffei – President and Chief Executive Officer Christopher W. Shean – Senior Vice President and Chief Financial Officer Mike George – QVC, President and Chief Executive Officer Analysts David Gober – Morgan Stanley Barton Crockett – Lazard Capital Markets Ben Mogil – Stifel Nicolaus Thomas Forte – Telsey Advisory Group LLC Matthew Harrigan – Wunderlich Securities Jason Bazinet – Citigroup Presentation Operator
Previous Statements by LINTA
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And with that I will turn the call over to Greg Maffei, Liberty Interactive’s President and CEO.Gregory B. Maffei Courtnee thank you, and good morning to all of you for joining us on the Liberty Interactive Earnings Call. Today besides myself speaking on the call we’ll have Liberty CFO, Chris Sean and QVC CEO, Mike George. After that we will take questions. We hope you have seen our announcement this morning on our plan to recapitalize Liberty Interactive into two tracking stocks, Liberty Interactive and Liberty Ventures. Attributing to Liberty Interactive we will have in a QVC, our eCommerce companies, our 34% interest in HSN, cash of about $500 million, QVC’s debt which is comprised of the bank debt it has and the bonds it’s issued and the senior notes that were issued by Liberty. Attributing to Liberty Ventures we’re going to have all of our non-consolidated interest excluding HSN but including Expedia, TRIP, Time Warner, our green investments and more. This entity will have cash of about $1.25 billion, we’re also attributing all of our exchangeable debentures including those associated with the Time Warner entities and at the time we complete these split-off of Liberty Ventures or the creation of Liberty Ventures, we’ll have some subscription rights handed out to each of the shareholders which will allow you to acquire more Liberty Ventures stock at a discount. We’ll talk more bout that going forward. The reason for that is to raise capital for investments in new business opportunities and to ensure the balance sheet strength of Liberty ventures. Regarding the process, we need to file an S-4 for the SEC, we need the shareholder vote on a meeting and we will not be required to get an IRS ruling. Our anticipation is that we’ll close some time hopefully early this summer.
The rationale for this recapitalization is not because as some has adjusted we want to maintain our market-leading share in trackers but instead to increase transparency and investor choice. With Liberty Interactive you're going to able to get a pure play video and eCommerce company better aligned with our retail eCommerce peers.We hope to highlight the operations and financial strengths of these very good businesses to further simplify this operating story and to isolate the complexity which Liberty has sum up two Liberty Ventures. With Liberty Venture we hope to better highlight some of the investments we have here that may have been overlooked due to their relative small size compared to QVC, to give us some flexibility, and in the same way we have the Liberty Capital to bet on our ability to tax efficiently monetize some of these investments and make other attractive investments. We also hope that better capital rates and prospects for both tracking stocks and as always given the tracking stock structure we’re able to maintain tax efficiency. Let me get back to the Q4 and year-end results for those operating businesses, looking at slide seven and I would note HSN’s good numbers today. It's clear that video commerce is alive and well and adapting. QVC had solid results in revenue and OIBDA growth especially I’d highlight our Q4 results in the U.S. Internet penetration QVC.com in the U.S. reached 40% in Q4, an all-time high and we had very large mobile growth which Mike George I’m sure will talk about more. The eCommerce companies also grew significantly outpacing comp score estimates for the quarter. And finally, I know we made significant repurchase of our stock at attractive prices. We bought $257 million of LINTA stock not quite the pace that I outlined at the Investor Day last fall but still quite strong. Read the rest of this transcript for free on seekingalpha.com