10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

IAC/INTERACTIVECORP Reports Operating Results (10-Q)

October 29, 2010 | About:
10qk

10qk

18 followers
IAC/INTERACTIVECORP (IACI) filed Quarterly Report for the period ended 2010-09-30.

Iac/interactivecorp has a market cap of $2.89 billion; its shares were traded at around $27.74 with a P/E ratio of 89.1 and P/S ratio of 2.1. IACI is in the portfolios of Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, Bill Gates of Bill & Melinda Gates Foundation Trust, Mario Gabelli of GAMCO Investors, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

A significant component of the Company's revenue is attributable to a paid listing supply agreement with Google Inc. ("Google"), which expires on December 31, 2012. For the three months ended September 30, 2010 and 2009, revenue earned from Google was $180.1 million and $140.6 million, respectively. The majority of this revenue is earned by the businesses comprising the Search segment.

Cost of revenue in 2010 increased $42.5 million from 2009 primarily due to increases of $31.8 million from Search, $5.8 million from Match and $4.5 million from Media & Other. The increase in cost of revenue from Search was primarily due to an increase of $29.5 million in traffic acquisition costs related to an increase in revenue. As a percentage of revenue, traffic acquisition costs increased over the prior year period due to an increase in the proportion of revenue from distributed toolbars and other arrangements with third parties who direct traffic to our websites, as well as a shift in partner mix to partners carrying higher traffic acquisition costs. Cost of revenue from Match increased due to the acquisition of Singlesnet and the formation of the Latin America venture. The increase in cost of revenue from Media & Other was primarily due to Notional, which commenced operations during the prior year period.

Selling and marketing expense in 2010 increased $15.7 million from 2009 primarily due to increases of $6.3 million from Match, $5.8 million from Media & Other and $4.8 million from ServiceMagic. The increase in selling and marketing expense from Match is due to an increase of $5.5 million in advertising and promotional expenditures primarily related to a new advertising agreement entered into during the second quarter of 2010, as well as the impact from the acquisition of Singlesnet and the formation of the Latin America venture. The increase in selling and marketing expense from ServiceMagic is due to increases of $2.8 million and $2.0 million in marketing and compensation and other employee-related costs, respectively. The increase in compensation and other employee-related costs from ServiceMagic is due in part, to the continued expansion of its sales force. Selling and marketing expense from Media & Other increased primarily due to increases of $2.2 million and $1.8 million in online marketing at Gifts.com and Pronto, respectively.

Selling and marketing expense in 2010 increased $19.0 million from 2009 primarily due to increases of $20.1 million from ServiceMagic, $14.7 million from Media & Other and $7.8 million from Match, partially offset by a decrease of $24.2 million from Search. The increases in selling and marketing expense from ServiceMagic, Media & Other and Match are primarily due to the factors described above in the three month discussion. The decrease in selling and marketing expense from Search is primarily due to lower advertising and promotional expenditures of $14.2 million, as the prior year period included expenditures associated with the NASCAR partnership and an ad campaign to rebrand the UK.Ask.com website, as well as a decrease in compensation and other-employee related costs at CityGrid Media (formerly Citysearch), due in part, to a decrease in average headcount.

General and administrative expense in 2010 increased $6.0 million from 2009 primarily due to increases of $5.5 million from Media & Other and $2.7 million from ServiceMagic, partially offset by a decrease of $1.7 million from Search. General and administrative expense from Media & Other increased primarily due to increased operating expenses associated with Vimeo and expenses related to Electus, which commenced operations during the prior year period. The increase in general and administrative expense from ServiceMagic is primarily due to an increase of $1.6 million in compensation and other-employee related costs. The decrease in general and administrative expense from Search is primarily due to the prior year period reflecting an increase in litigation related expenses.

Product development expense in 2010 increased $4.8 million from 2009 primarily due to increases of $3.0 million from Search and $0.9 million from Match. Contributing to the increase in product development expense at Search is a decrease in costs being capitalized in the current year period as compared to the prior year period related to the development and enhancement of IAC Search & Media's product offerings and related technology. The increase in product development expense from Match is primarily due to an increase in compensation and other employee-related costs driven by growth in headcount related to recent acquisitions.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.2/5 (5 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK