IAC/InterActiveCorpIACI

Morningstar Rating

Stock Research and Analysis

by Larry Witt, CFA

The new IAC owns a number of well-known Web sites including Ask.com, Match.com, and Citysearch. While some of its properties are profitable and growing, we think the company's flawed strategy and acquisitive history make the shares a risky investment. Read more

Bulls Say

All of IAC's online properties are highly scalable. If the company can generate traffic without spending too much on marketing, operating margins could expand significantly.

CitySearch is loaded with local content and well-positioned to take advantage of the nascent online local advertising market.

Although Ask.com is a tiny player in search, its market share has held up as Google continues to take share from Yahoo, AOL, and MSN.

Although revenue growth is slowing, Match.com is profitable and remains the most popular personals site on the Web. This is important in an a market where network effects are prevalent. Read more

Bears Say

IAC has transformed itself several times over the years, and we're not convinced that Diller's deal-making days are behind him. Therefore, shareholder value could be destroyed if an unfavorable transaction is consummated in the future.

Despite the spin-offs, IAC still owns dozens of online properties. This could lead to a lack of focus, poor execution, and lackluster financial results.

IAC's search ad deal with Google is very lucrative in the short term. However, over time, we think Google's clout will grow, allowing the king of search to receive more favorable terms in the future.

As media consumption continues to shift to the Web, attracting an audience and advertisers will only become more competitive over time. Read more

Strategy

IAC has transformed many times in the last decade. While the tinkering may be incomplete, the company is now primarily focused on monetizing its online properties through search and advertising. IAC Read more

Management

Chairman and CEO Barry Diller will continue to lead the new IAC. Diller will also maintain voting control of the company through its long-standing proxy agreement giving Diller the right to vote Liberty Media's shares. Liberty's involvement with IAC Read more

Profile

IAC recently spun off Ticketmaster, HSN, Interval Leisure, and LendingTree.com. The new IAC owns a portfolio of established online properties, including Ask.com, Citysearch, Read more

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