InterActiveCorp Profit Rises 5.3% on Strong Sales From Travel Sites

InterActiveCorp, the Internet commerce company controlled by Barry Diller, on Monday posted a 5.3% increase in fourth-quarter profit as sales rose at Expedia.com and the company’s other travel websites.

Net income rose to $156 million from $148.1 million, the New York-based company said. Per-share earnings fell to 20 cents from 30 cents as InterActiveCorp issued stock to make acquisitions and paid preferred dividends. Revenue rose 36% to $1.8 billion.

Sales at the travel division, the company’s biggest, jumped 41% to $677.4 million as more consumers turned to the Internet to make reservations. Diller said in the quarter that InterActiveCorp would spend more on marketing to keep pace with rivals such as Travelocity.com, a unit of Sabre Holdings Corp.

“They haven’t really lost market share and they continue to perform well” along with the rest of the online travel industry, said Peter Mirsky, an analyst at Oppenheimer & Co. in New York. He rates InterActive shares “buy” and he owns the stock personally.

Excluding costs to write down the value of assets and other items, InterActiveCorp said it would have earned $228.2 million, or 29 cents a share. That was more than the average estimate of 23 cents from analysts surveyed by Thomson First Call.

InterActiveCorp’s profit included a gain of $22.4 million, or 2 cents a share, as the company’s travel division reduced its estimate of liabilities owed to suppliers. The company also said it benefited by paying a “lower than normal” tax rate of 28% in the quarter. This year, the company said, it expects to pay a tax rate of about 39%.

InterActiveCorp shares rose $1.09 to $33.04 on Nasdaq.

Diller said on a conference call with analysts that first-quarter growth in operating income before amortization would be “flat to slightly up.” Competing travel websites and hotel companies that make reservations on their own Internet sites are spending more on marketing, he said.

Diller, a onetime Hollywood executive, sold cable television networks including USA and Sci Fi and the USA Films movie studio almost two years ago to Vivendi Universal. Shifting his focus to online commerce, he has purchased at least eight companies in the last year, including a minority stake that InterActiveCorp didn’t own in Expedia.

Diller has said he expects to make fewer acquisitions this year.

“We are on our way into a new bubble, and bubbles eventually get pricked,” Diller said. “This growth will also produce an endless number of brainless ideas, short-term greed, ridiculous valuations, investor speculation and all the other lovely horrors we’ve so quickly forgotten.”

Diller and InterActiveCorp still own a combined 6.9% stake in Vivendi Universal Entertainment, the U.S. entertainment arm of Paris-based Vivendi. General Electric Co.’s NBC TV division is buying Vivendi Universal Entertainment.

“I think they’ll probably do pretty well with it once they find out how dicey and horrid the movie business is,” Diller said in an interview on the CNBC financial news cable network.