Shares of



posted their biggest jump in at least two years after Chief Executive Barry Diller expressed optimism about a turnaround at the struggling HSN retailing unit.

Diller brushed aside a suggestion that New York-based IAC get rid of HSN, which has been a drag on the company. Earlier this year, IAC named former


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executive Mindy Grossman to oversee the retail unit, which gets most of its revenue from HSN. That business accounted for 48% of the company's $1.6 billion in second-quarter revenue.

"I think the long term is very good, and I think it's a very key part of the company," Diller said of HSN Tuesday during a conference call with investors after the release of earnings.

Wall Street's frustration with HSN is understandable. The retail business showed a 2% revenue gain in the second quarter, the smallest increase of any IAC unit. Operating profit gained 9% to $47 million.

Diller has given Grossman carte blanche to make big changes at the unit, which has been hurt by poor product selection.

"We have finally hired a senior executive that's really seasoned with wide and deep operating experience," he said. "I recognize that results, not rhetoric, are what you are interested in."

IAC's second-quarter results were better than Wall Street expectations, bucking the trend of disappointments that investors found in other big-cap Internet companies, including




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Shares of IAC, whose businesses include and

Evite, have dropped 16% this year. That's worse than the big market averages, but better than most other big-cap Internet companies, except for


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IAC shares rose $1.28, or 5.4%, to $24.99 in trading Tuesday.