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I've owned IACI for at least a year now and I've constantly read about what a "cash machine" the company is. I've never understood why the market doesn't appreciate this stock more.

I've also read repeatedly that Diller spent more than $20 billion assembling the components for IAC. Yet after yesterday's run-up, the market cap is still only $9.5 billion.

Is Diller crazy and just seriously overpaid for IAC's component companies -or- is Wall Street totally blind to the combined value of the conglomerate?

I suppose that possibly the $20 billion figure includes Expedia, which is not included in the current market cap.

Finally, if Diller did pay $20 billion for the current IACI (figure doesn't include Expedia) and the market cap is only $9.5 billion, does that indicate that initial IACI investors have watched the value of their investments drop by half?

Thanks for any help understanding this...
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The market cap, of course, is what the value of the company is in terms of stock value at the current price. The $20MM he paid for the technology could have been expensed against income as R&D cost or could have been capitalized (or carried as goodwill) and would have no influence on the stock price if the price was under book.

For example, if I own a company worth $10 million and tomorrow I pay $500K for the right to use "kmorley123" in my business, the valuation is still $10MM. I could put the asset on my balance sheet but it doesn't increase the market cap unless the market recognizes the value of what I bought and runs the stock up.
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