Updated from 10 a.m. EST
surged 15% Wednesday morning after posting a third-quarter profit and wowing Wall Street with plans for a big stock buyback.
The 80 million-share buyback comes as thecompany deals with a sagging stock. Shares of IAC are down some 40% from theirearly-year high. They surged briefly in Septemberamid rumors that CEO Barry Diller was consideringtaking the company private or rolling out a massivestock repurchase.
Wednesday's news seemed to justify that runup. IAC rose $3.30 to $25.30 around midday. But on a conference call with analysts Wednesday, Diller warned investors not to go crazy about the buyback.
"The authorization doesn't necessarily mean that we're going to buy stock back more aggressively," he said. "The purpose of the authorization is not to support the stock," he added.
Acknowledging continuing challenges at the company's domestichotel business, Diller reiterated his confidence that thee-commerce giant, which operates travel sites, the HSN home shoppingnetwork and other properties, will be the "No. 1 seller of travelworld-wide" in the next five years.
For the third quarter ended Sept. 30, thee-commerce conglomerate reported adjusted earnings, excludingcertain costs, of 24 cents a share. That's up from theyear-ago 17 cents, and 3 cents ahead of the ThomsonFirst Call analyst consensus estimate.
Net income based on generally accepted accountingprinciples rose to $89 million, or 12 cents a share,from the year-ago $19 million, or 2 cents a share.Revenue fell 7% from a year ago to $1.51 billion, inline with analyst estimates.
Operating income before amortization -- the cashflow measure preferred by InterActiveCorp and the analysts who follow it --came in at $253 million. Wall Street had beenexpecting about $235 million in OIBA, according toAmerican Technology Research analyst Mark Mahaney.
For IAC's travel segment, which operatesExpedia.com, Hotels.com andHotwire.com, among other properties, the performancewas solid. The segment posted OIBA of $175 million onrevenue of $571 million. Mahaney had been expecting$557 million in revenue and $150 million in OIBA.
Diller said that core problem with the travel business was the U.S.hotel-booking business, which has suffered from increasing competitionand a shortage of available inventory. Diller announced a multipartplan for turning that business around, encompassing improvedmanagement of personnel that recruit and work with hotel partners,increased differentiation with unique features, and additionalpackaging of hotels with other travel services.
Under new management, Diller said he believed the company'sMatch.com personals business would turn around in 2005. IAC'sTicketmaster and HSN, he said, are "rock solid cash generatingengines."
Three months ago,
Diller disappointed WallStreet with revenue that fell short ofexpectations and guidancethat was short of the company's previously bullishstance. IAC citeddifficulties with its merchant hotel business, amongother issues.
On Wednesday's call, the company said it wouldn't providefinancial guidance for next year, though it would try to supplysufficient financial and operations detail to help investors discerntrends.