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In case you didn’t get it the first few times, yes, IAC (NSDQ: IACI) Chairman and CEO Barry Diller still believes the search market will consolidate — and no, he isn’t trying to make it happen. He told analysts on the Q4 IAC earnings call: “I don’t know what form that consolidation will take but right now (but) Ask’s not for sale. We’re not selling it in any process and I expect that will continue.”
Diller did note that the changing competitive dynamics in the search business (ie Microsoft’s big push with Bing — which continues to drive up its market share) should help Ask once its search-advertising deal with Google (NSDQ: GOOG) expires in two-and-a-half years. “We’re in a better position now competitively than when we made the Google deal in that there is definitely another player that is certainly wanting to compete in as serious a way as you can and is putting large sums behind it,” he said.
In the meantime, IAC won’t be trying to compete with its rivals on the airwaves. Diller said that the company would not be doing any offline marketing for the search engine in the future in “any material way.”
As for the $1 billion loss — as in the amount of value IAC just wrote down on Ask.com and its other search business — it’s too big a number to ignore but no one at IAC is dwelling on it. Diller would rather focus attention on the $200 million or so in cash flow IAC generated in 2009 or the $100 million in smallish investments or the 25 percent stock buyback since the 2008 spin.
Why the write down? CFO Tom McInerney laid it out as a simple accounting fact of life. Every year in the fourth quarter, IAC has to gauge value and perform certain accounting tests. Long-term growth expectations for search came in lower and the need for an impairment charge kicked in.
Some other, non Ask.com, highlights:
— Mergers and acquisitions: Diller said the company still didn’t see “an acquisition of size out there.” He said there was “too much froth” in the valuations that VC firms are putting on their investments and doesn’t expect that to change. One business that IAC has talked about being interested in is Yahoo (NSDQ: YHOO) Personals — but Diller wouldn’t provide any updates on that.
— Stock price: Asked which of the company’s myriad properties would be the biggest positive surprise over the next few years, Diller lamented that the company was “so generally under-appreciated,” adding that its businesses are “selling for very little.” When another analyst followed up by asking what would change that, Diller said the company needed to deal with the $1.7 billion in cash it has on its books. A sign of things to come? The company doubled its stock buybacks during the quarter, compared to the prior quarter.