IAC Profits Down, As Expected

  |  May 2, 2006   |  Comments

Ask.com profits were also down, while revenue and queries both grew year-over-year.

Ask.com's profits dropped from last year's first quarter, though revenue and queries grew slightly.

The unit saw an operating loss of $6.4 million compared to a loss of $1.0 million a year ago. Increased marketing expenses, higher revenue share payments to third-party traffic sources and higher operating expenses got the blame for the profit dip. The InterActiveCorp (IAC) unit made its results public when the company reported its first-quarter earnings this morning.

Early results of the TV campaign promoting last quarter's Ask.com redesign were promising, according to Barry Diller, IAC's chairman and CEO, with up to 30-percent increases in daily volume common in April.

"You're going to get an early pop from any advertising campaign. The real issue is whether we can retain them," Diller said. "We'll know soon enough, but every early metric we're looking at is good."

Ask.com's revenue grew 9 percent over the first quarter last year, due to search query growth, which was offset by lower revenue per query. Ask.com gained a small amount of share of U.S. search queries, reaching 5.9 percent share in March, up 7 percent over March 2005. Revenue per query fell in part due to the reduced monetization efforts on Ask.com, and lower non-search advertising revenue.

Revenue from IAC's Media and Advertising segment, made up of Ask.com, Citysearch, iWon, Excite and MyWay, reached $117.6 million, mostly due to the inclusion of IAC Search & Media, formerly Ask Jeeves, which was acquired in July 2005. Revenue for the segment in the year-ago quarter was just $9.0 million, primarily from Citysearch.

IAC's overall first-quarter profit fell by 32 percent, based largely on poor earnings from its Home Shopping Network (HSN) TV network and LendingTree online mortgage business. Net income for the quarter fell from $68.9 million to $47.2 million, or $0.14 a share. Revenue rose 36 percent to $1.55 billion for the quarter, in line with analyst's expectations.

Diller downplayed the departure of Ask.com CEO Steve Berkowitz, who left to join Microsoft last month. Diller said Berkowitz was not involved in day-to-day operations of the company, which were handled by new chief executive Jim Lanzone.

"Steve was an asset to the company, and we're sorry he decided to leave. But we do not believe it will have an effect on what we do," he said.

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ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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