IAC shares surge despite $28M quarterly loss (Update)

Shares of IAC jumped $1, or 6.3 percent, to $16.96 in afternoon trading Wednesday, however, as investors likely found solace in the fact that IAC slightly exceeded revenue estimates and said it bought back stock during the quarter.

The New York-based company, headed by Barry Diller, said that in the first three months it lost $28.4 million, or 19 cents per share.

This compares with a profit of $52.8 million, or 38 cents per share, in the year-ago quarter. However, that quarter included income from operations that IAC has since spun off - home shopping network HSN Inc., time-share business Interval Leisure Group Inc., ticketing service Ticketmaster and lending and real estate business Tree.com Inc.

Excluding special items, IAC lost 2 cents per share. On that basis, analysts polled by Thomson Reuters expected a profit of 1 cent per share.

IAC said revenue fell 10 percent to $332 million, better than the $330 million analysts expected.

The harsh advertising climate, being felt across the media industry, also led to declines at IAC's online city guide Citysearch. Besides being hurt by the economy, revenue in IAC's media and advertising unit was decreased by IAC's decision to remove "toolbars" and search boxes from non-IAC sites and place them mostly on its own sites. The company makes more money from putting these on its own sites, and started this shift last year after renewing a deal through which Google Inc. sells ads on IAC sites.

Revenue at IAC's Match unit, which includes the Match.com and Chemistry.com dating sites, dipped 1 percent to $90.1 million even though Match's paid subscribers rose 6 percent to 1.4 million. Revenue per subscriber dipped 15 percent in international markets because of strength in the dollar. That means transactions done in other currencies translate into fewer dollars.

During a conference call with analysts, Diller said IAC has had discussions with Yahoo Inc. about acquiring that company's personal-ads business.

"Whether (the discussions) will go anywhere or not is, of course, enormously speculative," he said. "But I think Yahoo has said it's not an absolute core asset to their future, and it is core to us, personals."

A Yahoo spokeswoman said the company had no comment.

As in the prior quarter, IAC saw growth in two units. Revenue in emerging businesses, a unit that includes Web sites like ShoeBuy and RushmoreDrive.com, a search engine focused on the black community, rose 1 percent to $44 million. And ServiceMagic, which runs Web sites that match homeowners with home-improvement contractors, saw revenue climb 8 percent to $31.4 million.

RBC Capital Markets analyst Ross Sandler said the overall report was pretty much what he expected.

"The environment's tough, but they're hitting numbers," he said.

IAC bought back 3 million shares during the quarter at an average price of $15.15 per share - something Sandler called a nice surprise.

"If the company, having not bought back stock for a couple years, is now saying, `Our stock at these levels is attractive and we're finally putting money back to work here,' that sends a nice positive signal to the market," he said.

IAC also said Wednesday that it had acquired local restaurant guide Urbanspoon in February for an undisclosed amount. Besides operating Web restaurant guides across a number of cities, Urbanspoon offers a popular free application for Apple Inc.'s iPhone.

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