Earnings Preview: IAC/InterActiveCorp to report 1st quarter
NEW YORK—IAC/InterActiveCorp reports earnings for the first quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The Internet conglomerate's first quarter was dominated by a skirmish with major shareholder Liberty Media Corp. surrounding IAC's intention to split into five parts.
At the end of March, a Delaware judge sided with IAC chief executive Barry Diller and against Liberty, deciding Liberty had failed to prove Diller violated an agreement between them by pursuing the breakup plan. The judge ruled that Diller does not need to get Liberty's approval to split up IAC.
Liberty owns about 30 percent of IAC's equity but controls about 62 percent of the voting power due to a dual-share structure. Through an agreement between them, Diller has controlled Liberty's votes for years. Liberty had sued to reclaim the voting rights it claims Diller gave up when he went against Liberty's will in pushing for the breakup.
Diller initially announced plans to spin off IAC's HSN home shopping network, Ticketmaster, LendingTree.com and Interval time-share businesses in November.
Also during the quarter, IAC said Doug Lebda would become head of its financial services and real estate businesses, and Jim Safka the new CEO of Ask.com. IAC also said Scott Garell would become president of Ask.com and that John Park would take over as head of IAC's consumer applications and portals.
BY THE NUMBERS: Analysts, on average, predict first-quarter adjusted earnings of 30 cents per share on revenue of $1.53 billion, according to a Thomson Financial survey.
ANALYST TAKE: In a recent note to clients, Citi Investment Research analyst Mark S. Mahaney predicted IAC will report adjusted earnings of 26 cents per share on $1.62 billion in revenue.
"Given the macro headwinds in retail (particularly in offline catalogues) and real estate and rising online marketing costs, we anticipate an inline quarter -- i.e. we anticipate that IAC will report March quarter results that generally meet current Street estimates," he said.
Mahaney rates the stock "Hold" with a $27 price target.
WHAT'S AHEAD: There could be more legal issues with Liberty ahead. The Delaware judge said it was too early to decide whether IAC directors met their fiduciary duties on voting for or against the spinoffs, since they had not yet fully approved the plan or its details. Lamb wrote that he would reserve judgment on that until a later date, if needed.
STOCK PERFORMANCE: Shares of IAC declined almost 23 percent in the quarter. Shares finished trading at $20.42 on Monday.
