IAC loses $369.9M on mortgage woes

NEW YORK - Barry Diller's IAC/InterActiveCorp lost $369.9 million in the fourth quarter, on a big writedown at its mortgage referral business, tax expenses and costs in anticipation of the proposed spinoff of four businesses.

The report Wednesday came as Diller and Liberty Media boss John Malone are battling for control of the Internet conglomerate whose assets include the HSN home shopping network, Ask.com, Ticketmaster, Citysearch, Evite and LendingTree.

Liberty, a major IAC shareholder, has sued to halt the spinoffs. Diller said the spinoffs, initially planned for the second or third quarter, could be delayed by a couple months or more. Some anlysts say the suits could derail the plan.

"At this point, we just don't know," Diller said about a possible delay. The court has scheduled the matter for March 10.

New York-based IAC said its net loss amounted to $1.31 a share for the October-December period versus profit of $15.3 million, or 5 cents per share, in the same period in 2006.

Revenues rose 8 percent to $1.86 billion from $1.72 billion a year ago.

Analysts polled by Thomson Financial had expected a profit of 55 cents per share on sales of $1.83 billion. Those predictions typically exclude one-time charges.

IAC shares fell $1.71, or 7 percent, to close at $22.84 after sinking to a 52-week low of $22.76 earlier in the session.

In November, Diller announced plans for IAC to spin off its HSN home shopping network, Ticketmaster ticketing service, Interval time-share business and LendingTree mortgage referral units.

Malone, the cable magnate, said the proposed spinoffs would dilute the voting power attached to his company's shares. Liberty has sued to force the removal of Diller from the board and stop the spinoffs.

"I do wish Liberty hadn't raised the roof on this in such an aggressive way," Diller said Wednesday.

IAC sued Liberty in Delaware courts last month and Liberty responded with two lawsuits, one of which sought to oust Diller as chairman and wrest away control of the company.

While Liberty owns about 30 percent of IAC's equity, it controls about 62 percent of the voting power because of a dual-share structure under which it holds all outstanding Class B common stock, which carries 10 votes per share.

Diller has controlled Liberty's votes for years, but Liberty sued to reclaim those rights. Its lawsuit charges that Diller gave up those rights when he went against Liberty's will in pushing forward with the spin-offs.

"We'll get through this," he said Wednesday. "I don't think it'll last very long. I think at most probably a couple of months. And we're plowing forward both to operate our businesses and to conceptualize, organize the companies when they do go out publicly and stand on their own."

Sanford Bernstein analyst Jeffrey Lindsay said the lawsuits raised many questions, including what would happen to IAC if Liberty won in court and whether Diller would stay on as CEO.

"If Liberty does prevail, either on one or the two separate pieces of litigation, that's gonna have consequences," Diller said.

Revenue at online mortgage referral unit LendingTree fell by 55 percent to $52.1 million as it dealt with a falling housing market. That unit swung to an operating loss of $508.1 million from a profit of $7.2 million in the same quarter of 2006. IAC spent $11.2 million on restructuring costs for LendingTree and wrote down the value of intangible assets by $475.7 million.

The company also said it spent $4.1 million in the quarter on transaction costs for the proposed spin-offs and paid $2.7 million more in payroll taxes tied to the exercise of options.

The company said its Ticketmaster ticketing business had a 27 percent jump in revenue in the quarter. Diller also said HSN, with a 3 percent revenue increase, had rebounded from earlier self-inflicted problems.

For the full year, the company reported a net loss of $144.1 million, or 50 cents per share, versus a profit in 2006 of $187.1 million, or 59 cents per share. Revenue in 2007 was up 8 percent to $6.37 billion from $5.91 billion a year ago. Analysts had expected full-year earnings per share of $1.55 on revenue of $6.41 billion.