IACI

IAC/InterActiveCorp (IACI)

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IAC/InterActiveCorp. (IACI)

Q4 2008 Earnings Call

February 03, 2008 11:00 AM ET

Executives

Thomas J. McInerney - Executive Vice President and Chief Financial Officer

Barry Diller - Chairmen and Chief Executive Officer

Analysts

Jennifer Watson - Goldman Sachs & Co

Ross Sandler - RBC Capital Markets

Jeetil J. Patel - Deutsche Bank North America

Mark Mahaney - Citigroup

Douglas Anmuth - Barclays Capital

Justin Post - Banc of America Merrill Lynch

Jeffrey Lindsay - Stanford Bernstein

Bridget Weishaar - JP Morgan

Scott Kessler - S&P Equity Research

Alan Gould - Natexis Bleichroeder Inc.

Jeff Rath - Canaccord Adams

Presentation

Operator: Good morning. My name is Christie and I will be your conference operator today. At this time, I would like to welcome everyone to the IAC Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions)

Now I turn the call over to Tom McInerney, Executive Vice President and Chief Financial Officer. Please go ahead sir.

Thomas J. McInerney

Thanks operator and everyone for joining us this morning for our fourth quarter earnings call. Barry will make some brief remarks, after which I will come back to quickly take through some housekeeping issues.

But first, I'll remind you that during this call, we may discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as 'we expect', 'we believe', 'we anticipate', or similar statements. These forward-looking statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our Q4 2008 press release and our periodic reports filed with the SEC.

We will also discuss certain non-GAAP measures and I refer you to our press release and the 'Investor Relations' section of our website for all comparable GAAP measures and full reconciliations.

With that I will turn it over to Barry.

Barry Diller

Thank you, Tom. Good morning, everybody. We're going to follow our... I guess its our second time maybe third in terms of trying to get the questions as quickly as possible, and not take long with the speeches, with lots of this versus that etcetera figures.

I got only a couple of things of say. First on our cash, I know cash is... should be certainly with this company where 80% of our value is in cash. So its more than appropriate topic of interest, concern whatever opportunity.

First, I don't think its exactly gathering cobwebs yet. We have made few small acquisitions in the single and low teens of million. All of these are... further extend are current business. And we have probably four, five, six different transactions in various stages that if we did them all, which I doubt we do, totaled may be $100 million.

Now the truth is that nothing is the news on the cash, other than to say again. But I can't imagine that we're going to spend anywhere near half our capital on the inline acquisition. And that borrowing anything transformational that of course you can't predict. We'll repay trade cash to the shareholders.

But there is no timeline to this and we feel no anxiety to begin this process before certainly the next month tell us what known... what unknown opportunities might present themselves. Right now I say that I've looked to the latter half of the year for us doing anything specific in regard to repatriating the cash.

And on Ask and Thomas going to talk bit about Ask and I think talk a bit about first quarter trends. Correct?

Thomas J. McInerney

Correct. Yes.

Barry Diller

I feel that most of the issues not everything that has been self inflicted. Not out of mistakes but out of aspirations for getting that to real and consistent growth. And for real and consistent growth, we're going to have to wait a little more quarters and it is of course speculative. Our problems had been both in the speed of the service and in less than great results. And that, in spite of the large increases that we got in queries from large marketing efforts, they failed to retain users and they failed to increase frequency of use and this was the pattern of last year.

In October, we launched a new product which was a great improvement in speed and in getting to the right answers. But the initial consequence that's where I stay self inflicted. Was we got less queries because we were making the product more efficient.

However the testing in the fourth quarter showed us fast retention and frequency were rising which is what we'd hope. That was our theory. And that together with spending very little marketing money in the fourth quarter lead to the decline.

Now as to the future, we've changed our tactics on marketing. We're now going after vertical sites that gives us both traffic and gives users then a taste of a better experience so that they'll come back. Our Dictionary.com purchase last year was an example of that. It really taught us that that was an excellent way to grow. We just announced our deal with NASCAR which has the widely dedicated audience of 75 million and we are going to back up with a very focused marketing campaign over the next three months. Then we're going to add between 8 to 10 other verticals as the year rolls out.

That's the strategy for Ask, if we are right, we'll see query growth begin to increase significantly by the beginning... by the probably middle of the year. Now, I invite of course all questions about this and I just wanted to give a slight overview to the Ask question, and the cash question, because I know it's certainly topmost on everyone's mind. So, with that Tom you want to?

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