IAC Call: Diller: Old IAC Was Too Complex; Search Ads Hold Up, While Display 'Spotty'

This story was written by Joseph Weisenthal.
Work in progress For its last call as a single company, all five CEOs and their CFOs are on IAC's (NSDQ: IACI) conference call. Kicking off the call, Diller noted that it's not even worth talking about Old IAC anymore, in part because it's almost gone, but really because "It's just too much complexity and information." That statement speaks as much to the company's conference calls and earnings releases as it does to the whole notion of Old IAC: 'just too much complexity'. Hence the breakup. Right now the company doesn't have precise timing on the split, except that it will be "very soon".

-- New IAC Profitability: Rather than have all of the CEOs go through their own numbers, CFO Tom McInerney quickly ran through the results of each unit. On New IAC, he noted the lower revenue was "reflecting de-emphasis of sponsored listing distributions business." All IAC divisions grew profits by double digits, except emerging businesses, which remains in investment mode. For the coming quarters, except to see the same trends, perhaps even a decline in revenue growth, but again, at higher margins, so this is a voluntary tradeoff.

-- Online Ad Environment: McInerney: "When we look at the business, there's always pockets in these types of climates, the most performance-oriented advertising tends to be the most resilient (search, lead-gen)." Search is seeing good gains, even excluding the new Google (NSDQ: GOOG) agreement. "Display side is a little spottier". Diller: "There's generally a shift, as we all know, to online advertising in the greater pie (given that it's targeted and based on actions), the secular change is going to have an ameliorating effect on whatever the general economic effects on advertising are."

-- Search Share: Diller: "We spent a good deal on marketing (ed note: the billboards), we got big big increases in queries after we stopped marketing, we lost many of them." Now it's more important to focus on frequency and retention, both of which are up significantly year over year. In the late 4th quarter, new marketing endeavors will be based on a "more practical path." On share: "We just passed AOL that's not one of the great land feats in the world"

-- Non-Ask IAC: Both CitySerach and Evite are doing well. CitySearch will do over $100 million revenue next year. Evite growing 20 percent year over year. Both services have very significant product overhauls coming in the back half of the year. Expect a lot more investments into local next year.


By Joseph Weisenthal
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