IAC Interactive IACI Revenues Up, Profit Elusive (YHOO, LYV, BIDU)

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Accordfing to statistics from NetMarketShare, Ask.com, the search site owned by IAC Interactive (IACI) has the fifth largest share of global search, at 0.63%. Leaving out Baidu Inc. (BIDU), IAC ranks fourth.

Perhaps that’s why Barry Diller, who controls IAC, has said that the search site is not a big part of IAC’s future. But search provided more than half of IAC’s revenues in the first quarter of 2010 and by itself surpassed net income for the whole batch of segments that make up IAC. If it weren’t for seach, IAC would have posted an operating loss of around $27 million instead of an operating profit of $3.5 million.

As recently as last week, there was some speculation that IAC might be interested in making an offer for one of the hottest mobile startups around, Foursquare, which offers a mobile phone app that lets users get or post location-specific information to social networks like twitter and Facebook. The app works either on smartphones or by text messages on other cell phones.

Foursquare is seeking another round of venture funding and IAC is competing with some top rank venture firms as well as Yahoo! Inc. (YHOO) and privately-held Facebook, to name a couple of other suitors. Yahoo is said to have offered $125 million for Foursquare, and IAC could join the bidding with its cash hoard of nearly $1 billion.

IAC owns the Citysearch web sites and it appears that Foursquare or a service like it would be a good fit. But Diller appears to have put his money on a different horse: Live Nation Entertainment, Inc. (LYV), which came into being in January through the merger of Live Nation and Ticketmaster. Diller is Live Nation’s chairman, and now that it is the largest live entertainment company in the world, Diller may be spending more time, and looking for ways to spend more money, on the entertainment/media business than on the social networking/search business.

It’s hard to argue that IAC shouldn’t sell its search business, and take the cash. After all the company has been buying back stock in an effort to do something that will enhance shareholder value. IAC spent more than $246 million on share buybacks in the first quarter of 2010, and still has authorization to buy an additional 19.2 million shares.

Now would be a good time to shop IAC’s search business around. It had a pretty good quarter, search traffic is up, and revenue rose 20% in the quarter. What will become of IAC’s other segments is anybody’s guess.

Tell us what you think here.

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Article printed from InvestorPlace Media, https://investorplace.com/2010/04/iac-interactive-iaci-revenue-profit-yhoo-lyv-bidu/.

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