IAC/InterActive Swings to Huge Loss

The Internet conglomerate gets hit by a $300 million impairment charge for its catalog business
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IAC/InterActive Corp.


swung a second-quarter loss but nonetheless managed to beat Wall Street estimates.

The Internet conglomerate posted a loss of $421.6 million, or $1.51 a share, in the second quarter, dinged by a $300 million impairment charge for its catalog business, Cornerstone. That compares to earnings of $94.6 million, or 31 cents a share, a year ago.

Excluding certain items, IAC would have earned 35 cents a share, beating analysts' expectations for 31 cents a share.

Revenue in the second quarter grew 7% to $1.6 billion from $1.49 billion a year ago, in line with Wall Street estimates.

Shares of IAC were down 1.7% to $17.65 in afternoon trading.

The company reported for the last time its results as a conglomerate and expects to post future results as five separate companies: HSN, Ticketmaster, Tree.com (formerly Lending Tree), Interval, and the new IAC, which includes Ask.com, Match.com, Evite and Citysearch.

Chief Executive Barry Diller, who earlier this year had been embroiled in a now-resolved legal battle with

Liberty Media


over the spin-offs, was not clear on when the break-up would occur except to say it would happen soon. He spent much time on Wednesday's conference call discussing the merits of each individual company, specifically the new IAC, which he will head.

Diller pointed to the strength of Ask.com since renewing its partnership with


(GOOG) - Get Report

, through which it outsources its online search ads.

He added that the strategy for Ask.com in the future will have more to do with increasing the frequency of visits and retention of its users than trying to drive one-time spikes in search queries.

"The keys for Ask are much more practically driven," he said.

Under the new structure, IAC's revenue grew 11% in the second quarter to $354.4 million. The division took a $12.6 million hit in expenses related to the spin-offs.

HSN saw its second-quarter revenue climb by only 2% to $695.8 million, with Cornerstone experiencing a 12% decline. The $300 million impairment charge for Cornerstone reflected deterioration in the macro economy, particularly in home and apparel, which represent the catalog business's primary markets.

Ticketmaster's second-quarter revenue jumped 30% to $382.4 million, driven by a 7% increase in tickets sold and 10% higher average overall revenue per ticket. The company said it had not experienced much of an impact from the macro economy on ticket sales. It also expects to make up the loss of revenue from Live Nation -- whose contract with Ticketmaster expires this year -- with international sales, which grew 30% in the second quarter.

Revenue from IAC's time-share division, Interval, increased by 20% in the second quarter, including a $9 million contribution from the acquisition of ResortQuest Hawaii last May. At the same time, the company pointed out that profits for Interval grew at a slower rate than revenue because of a double-digit decrease in flights to Hawaii as a result of two low-cost airlines servicing the region going bankrupt.

Still struggling is Tree.com, which has been hit hard by the housing crisis. Revenue for the division fell 47% in the second quarter. Tree.com saw fewer loans originated and sold into the secondary market, and revenue from all of its home loan offerings declined.