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Author: newsreporter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 215  
Subject: Pieces Come Together Date: 12/14/2006 3:38 PM
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IAC's Pieces Come Together
http://tinyurl.com/v54qm


Diller has consistently shown that Wall Street is taking too dim a view of its earnings performance. According to Thomson First Call, IAC has beaten the Street for five straight quarters, with positive surprises ranging from 6% to 24% above analysts' consensus.

...

Good thing, then, that IAC is finally getting some of the respect it deserves. After being stuck in a holding pattern near the $25 mark, IAC began a rally this summer, moving from a low of $23.62 in July to $37.39 in recent trading Tuesday.

...

For once, Diller's company is getting some of the respect it has long deserved. In April, I pointed out that IAC was a bargain waiting to happen, and now that the stock is rising, it's time to ask -- does IAC still deserve to go higher?

Analysts still don't think so. Most remain skeptical about IAC's growth into the future. Eleven still rate it a hold, while six rate the stock buy and only one a strong buy, according to Thomson.

As a group, they are looking for earnings per share to grow to $1.52 this year, up from $1.33 in 2006, and in 2007 to make a similarly modest rise to $1.79.

...

That Diller is putting that money in the stock rather than into new acquisitions or new R&D, as Google might, says he's confident that the pieces are now in place to keep profit growing.

One argument for Diller being right is in the stock's valuation. IAC is trading at 20.2 times its 2007 earnings.

...

More encouraging, IAC is finally taking steps to integrate its search engine Ask.com into its other properties while innovating new features.

The recently unveiled AskCities -- a search engine tailored to local markets that incorporates IAC properties such as Ticketmaster, as well as other sites such as Yelp.com -- is already as useful if not more so than local search projects from Yahoo! and Google.

And Ask has held its own against Google in search. Its share of the search market is modest -- usually around 5% in most search surveys -- but consistently gains market share.

...

Chief Operating Officer Doug Lebda said in the company's third-quarter earnings call that "it's safe to say we are still in the very early days of integrating Ask."

Diller has also made noise about getting into media, with produced content for its sites.

Whatever its future plans, IAC has finally emerged as a worthy rival to the big four Internet giants. Diller may still disrupt things if selling off and buying new businesses cuts short the company's chain of strong earnings reports.

But for now, with IAC on a strong footing, it's a forward march in the Internet sector.
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