On Mar 25, 2014, we issued an updated research report on
Liberty Interactive Corp.
). Despite reporting weak financial results, we believe that the
company's TV home shopping business will continue to flourish.
The QVC segment has transformed itself into a powerful global
brand, which may boost Liberty Interactive's revenues in the
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Liberty Interactive has delivered negative earnings surprise in
all three quarters last year, with an average miss of 17.60%. The
company reported weak financial results for the fourth quarter of
2013, where both its top and bottom line missed the Zacks
Liberty Interactive's QVC division is benefiting from the surge
in online sales. Management stated that its online sales will
constitute more than 50% of the total revenue in the U.S. by
2014. The major thrust is coming from the growing adoption of
high-end smartphones in the U.S. QVC has launched a synchronized
content for its mobile applications. This feature allows
smartphone users to get real time information about a product
which is broadcasted on a TV show. This will promote online sales
), QVC is the second-largest e-Commerce retailer in the U.S.
Liberty Interactive holds approximately 38% of
) and about 22% of the equity and 57% of the total votes of all
) common stock.
Through 12 channels in eight countries, the company covers 300
million homes. Recently, the board of directors of Liberty
Interactive raised the share buy-back program by $1 billion. Such
a move will boost shareholders' value moving forward.
For the first time, the company's e-Commerce business in
the U.S. accounted for 50% of the total revenue in Dec
2013. Moreover, in the U.K. and Japan, orders placed through
mobile accounts represented over 50% of the total orders placed
during the reported quarter. Exposure to international markets,
such as Japan, Germany, Italy, and the U.K., will enable QVC to
achieve a high rate of growth.
On the flipside, Liberty Interactive's businesses are susceptible
to rapid technological changes. Large cable TV operators are
increasingly deploying digital TV networks, which is gaining huge
market traction. This may adversely impact the channel
positioning of Liberty Interactive's networks.
Increasing deployment of personal video recorders,
video-on-demand technology, and IPTV network are systematically
changing the distribution and viewing habits of the common
people. These fundamental changes are taking a toll on the home
shopping networks. Moreover, the home shopping and Internet
retailing market place are getting competitive day by day.
Liberty Interactive currently carries a Zacks Rank #3 (Hold).