InterActiveCorp (IACI) edged on to Wall Street's radar screen Tuesday, but maybe not in the way Barry Diller wanted.
The company topped analysts' financial expectations, thanks mostly to a strong performance in its online travel business. But shares of the former USA Interactive slid 4% in early trading as some investors slipped out of a stock that has been a hot performer this year.
Nonetheless, IACI's numbers reflect a strengthening hand for CEO Diller, who is attempting to build a full-service online commerce empire -- and get the kind of Wall Street valuations currently accorded to more closely watched powerhouses
For the second quarter ended June 30, IACI reported revenue of $1.53 billion, up from $1.11 billion in the second quarter of 2002. The consensus of analysts surveyed by Thomson First Call was $1.47 billion.
Operating income before amortization, usually referred to by analysts as earnings before interest, taxes and amortization, amounted to $202.9 million, matching estimates from SoundView Technology and U.S. Bancorp Piper Jaffray.
"Adjusted EPS," or earnings per share excluding noncash items and one-time items, amounted to 18 cents a share, a penny ahead of the First Call number. On the basis of generally accepted accounting principles, EPS from continuing operations was 9 cents, compared to a 22-cent loss one year earlier.
Shares in IACI, which have climbed from $15.31 to as high as $42.88 over the past year, fell $1.05 to $38.45 in Tuesday morning trading.
Key to the company's results was room-booking site Hotels.com, the majority-owned subsidiary that IACI formally acquired in June, and online travel agency
, the subsidiary which IACI hopes to completely take over within a few days, pending an Expedia shareholder vote.
The company's travel services revenue grew 72% to $653 million, while operating income doubled to $89 million. Expedia reaped higher revenue per air ticket and an increase in hotel room nights stayed. Hotels.com's revenue benefited from room nights stayed, as well.
IACI's electronic retailing unit, driven by the HSN home shopping network, saw its operating income more than triple to $39 million, though the comparison was helped by an $18 million charge in the second quarter of 2002 related to the shutdown of HSN's Spanish language service.
InterActiveCorp hasn't ceased making acquisitions to grow. The company announced a deal three months ago to purchase online loan exchange
IACI also has a minority stake in
Vivendi Universal Entertainment subsidiary, which Vivendi Universal is trying to sell in a closely watched auction. IACI isn't a bidder, but Diller and IACI may end up playing a major role in the ultimate transaction.
The company reaffirmed its 2003 adjusted EPS target of 75 cents, but said its GAAP earnings for the year would be "significantly" lower than planned because of various noncash charges.