Are you looking for a good place to eat? Do you have questions
you need answered? Do you need to know the meaning of a word? Are
you looking for love? All you need to do is logon to Ask.com; it
has the answers. Ask competes with Google and is one of the
search engines owned by IAC/Interactive (
), which is a web company that just reported earnings. Whether
you need to know the meaning of a word or if you are looking for
a special someone, the company has a wide portfolio of websites
including ones you probably use every day without even thinking
IACI reported earnings of 1.04 per share beating expectations of
$0.91 and last year's $0.70 per share. While earning more, the
company's revenues fell from 5.3% from $765.3M one year ago in
this quarter to $724.3M. For all of 2013, sales grew 7.6%.
Analysts had been expecting a drop in this quarter, but only to
$743M, so the shares took a hit when this was reported, dropping
about 5%. If you are searching for answers on why the revenue
fell, look no further than Google (
). Don't Google it, a Google policy change is the answer as the
company has been adjusting formulas on advertising behind the
scenes in a way that adversely effected IACI results. Online
advertising rates and search results play a large role in the
many websites this company runs.
IACI owns a portfolio of web properties providing information,
services and advertising to consumers. The company owns Ask.com,
Match.com, Vimeo, The Daily Beast, Urbanspoon, OKcupid, CityGrid
and much more. The company owns or has interest in sites
internationally where it has taken successful business models and
applied them. As an investor, you probably know of Investopedia,
a handy site for definitions, and you might go to dictionary.com
to look up words. While it is true that IACI is not Google
or Facebook, it has a large number of sites on nearly any
available topic. You will likely find yourself on one of its
sites whether you intend to go there directly or not. In
fact, some users may well find the plethora of offerings, like
the Ask.com toolbar, which can sometimes be installed
automatically with other programs, of lower value and maybe even
annoying. But whatever your personal thoughts are on some the
sites and services, they do make money.
People are spending more time and more money on the Web.
U.S. online retail sales have grown about 13% a year since 2010
and analysts expect that growth to continue into 2014.
Advertising revenues have also grown across the industry with a
15% gain in 2010, a 22% gain in 2011, and a 15% gain in 2012.
When 2013 numbers finally get tallied expectations of 14% growth
are expected with 13% growth possible for 2014. While it is true
the trend is toward slightly slowing growth, double-digit growth
year after year is still phenomenal. Advertisers are committing
more of budgets to online areas advertising where they can
precisely target consumers and see instant results.
Chart Courtesy of
Take a look at a covered call on IACI. The stock is trading
near $65.04 with the July 65 call going for 5.30. That means one
can buy the stock and sell a covered call for a net debit of
59.74 (65.04-5.30). The covered call is active for 164 days
(until July 19, 2014) and the trade has an 8.8% assigned return
and 8.8% of downside protection. If the stock expires above 65
the trade will bring in a full return and as long as the stock
expires above the entry price of 59.74, the trade will make
money. Since this is a covered call we don't want to see the
stock fall significantly or we could lose money on the trade.
Life is getting more dependent upon the internet every day and
owning a piece of the net sounds like a good long-term strategy.
IACI has proven that it knows the internet space especially after
having spun off Expedia, Lendingtree.com, Home Shopping Network,
and Interval. The company is operating in a dynamic space
building websites, providing services and offering information of
all sorts. Take a look at investing in IACI. It just might have
what you are looking for.