Iac/interactivecorp has a market cap of $2.65 billion; its shares were traded at around $22.77 with a P/E ratio of 87.7 and P/S ratio of 2. IACI is in the portfolios of Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, Bill Gates of Bill & Melinda Gates Foundation Trust, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, PRIMECAP Management.
Highlight of Business Operations: Cost of revenue in 2010 increased $23.2 million from 2009 primarily due to an increase of $25.2 million from Search, partially offset by a decrease of $3.3 million from Match. The increase in cost of revenue from Search was primarily due to an increase of $23.7 million in traffic acquisition costs. Cost of revenue from Match decreased primarily due to lower traffic acquisition costs following the sale of Match Europe.
Selling and marketing expense in 2010 decreased $1.7 million from 2009 primarily due to a decrease of $11.8 million from Search, partially offset by an increase of $9.2 million from ServiceMagic. The decrease in selling and marketing expense from Search is primarily due to lower advertising and promotional expenditures of $9.9 million, as the prior year period included expenditures associated with the NASCAR partnership. The increase in selling and marketing expense from ServiceMagic is due to an increase of $7.5 million in online and offline marketing and an increase in compensation and other employee-related costs, due in part, to the continued expansion of its sales force. The growth in service requests during the year from paid channels outpaced the growth in free requests as a result of the increase in marketing.
General and administrative expense in 2010 increased $3.6 million from 2009 primarily due to increases of $4.0 million from Media & Other and $1.6 million from corporate, partially offset by a decrease of $2.3 million from Match. General and administrative expense from Media & Other increased primarily due to the continued investment in Electus and Notional, as well as increased operating expenses associated with Evite and Vimeo. The increase from corporate is principally due to an increase of $2.7 million in non-cash compensation expense related to equity grants issued subsequent to the first quarter of 2009, partially offset by lower taxes and professional fees. The decrease in general and administrative expense from Match is due to a decrease of $3.0 million in acquisition related expenses.
Operating income in 2010 increased $36.7 million from 2009 primarily due to an increase of $32.4 million in Operating Income Before Amortization described above and the decreases of $4.7 million in amortization of intangibles and $2.3 million in amortization of non-cash marketing as well as the inclusion in the prior year period of a goodwill impairment charge of $1.1 million, partially offset by an increase of $3.8 million in non-cash compensation expense. The decrease in amortization of intangibles is primarily due to the write-off of certain definite-lived intangible assets at IAC Search & Media during the fourth quarter of 2009. The amortization of non-cash marketing referred to in this report consists of non-cash advertising credits secured from Universal Television as part of the transaction pursuant to which Vivendi Universal Entertainment, LLLP ("VUE") was created, and the subsequent transaction by which IAC sold its partnership interests in VUE.
In 2010, the Company recorded an income tax provision for continuing operations of $4.0 million on a pre-tax loss of $13.9 million. The continuing operations tax provision, despite a pre-tax loss, was due principally to a valuation allowance on the deferred tax asset created by the impairment charge for our investment in HealthCentral, interest on tax contingencies and state taxes, partially offset by foreign income taxed at lower rates. In 2009, the Company recorded an income tax benefit for continuing operations of $2.7 million on a pre-tax loss of $32.6 million, which represents an effective
At March 31, 2010 and December 31, 2009, the Company had unrecognized tax benefits of $394.9 million and $394.3 million, respectively. Unrecognized tax benefits for March 31, 2010 increased by $0.6 million due principally to a net increase in deductible temporary differences. The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. Included in the income tax expense from continuing operations and discontinued operations for the three months ended March 31, 2010 is a $2.4 million expense and a $1.7 million expense, net of related deferred taxes of $1.6 million and $1.2 million, respectively, for interest on unrecognized tax benefits. At March 31, 2010 and December 31, 2009, the Company has accrued $75.5 million and $68.7 million, respectively, for the payment of interest. At March 31, 2010 and December 31, 2009, the Company has accrued $5.0 million for penalties.
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