Big write-downs at LendingTree helped drive a $369.9 million fourth-quarter loss at parent company IAC/InterActiveCorp, which said the mix of good news and bad news among the dozens of businesses under its umbrella justifies a plan to reorganize IAC into five independent companies.
Meanwhile, Bankrate Inc. said that although fourth-quarter results were hurt by a slow December, the company remained profitable, and acquisitions and a refinancing boom could help make 2008 the company’s best year ever.
IAC announced in November that it planned to reorganize into five independent, publicly traded companies (see Inman News story).
While dozens of companies would remain part of IAC — including Ask.com, Citysearch, Excite, and IAC Advertising Solutions — other IAC units would be spun off to four new umbrella companies: LendingTree, HSN home shopping network, Ticketmaster, and Interval International.
LendingTree would include RealEstate.com, Domania, GetSmart, Home Loan Center and iNest. Interval International would include CondoDirect, Resort Quest Hawaii and VacationSource.com.
Had the reorganization already occurred, LendingTree would have posted a $508 million fourth-quarter loss, thanks to a $475.7 million write-down of goodwill and intangible assets, IAC said.
"This charge reflects the company’s reassessment of the likely future profitability of lending in the face of current mortgage market conditions and the operational strategies undertaken in connection with such market realities," the company said today in a report to investors.
Last May, LendingTree laid off about 440 workers, or 20 percent of the company’s work force, in the face of falling revenue and loan production (see story).
Revenue at the companies to be grouped under LendingTree fell 55 percent to $52.1 million during the fourth quarter, IAC said.
"There is good news and bad news this quarter — the mix of which is another reason why our previously announced plans to reorganize IAC into five independent public companies makes more and more sense," IAC Chief Executive Officer Barry Diller said in a statement.
The good news for IAC included a continued turnaround at HSN; record worldwide ticket volume at Ticketmaster; increased queries from distributed toolbars Fun Web Products and Ask; and increased transactions and membership at Interval, Diller said.
For the year, IAC’s net loss totaled $144.1 million, compared with net income of $187.1 million in 2006.
Bankrate, which provides information about interest rates and fees on products including mortgages, credit cards, auto loans and money market accounts, said fourth-quarter results were dented by a slow December, but that the company is poised for growth in 2008.
Fourth-quarter revenue grew 22 percent from the previous year, to $25.2 million, but net income grew by a more modest 5 percent, to $4.1 million, the company said. While online revenue was up 33 percent for the quarter, to $22.8 million, print publishing and licensing revenue went in the other direction, falling 32 percent from a year ago to $1.1 million.
Chief Executive Officer Tom Evans said October revenue was the best first month of any quarter in company history, and November generated record cost-per-click revenue on Bankrate.com. But after the strong start to the quarter, Web site traffic declined in December and several large institutions cancelled ads.
"We had nearly $2 million in canceled displayed ads in the last few weeks of December," Evans said in a conference call to investors.
Since then, he said, "The business has come roaring back."
January was the best month in the history of the company, he said, with record unique visitors, page views, and cost-per-click and display ad revenue. Evans attributed the lift to a refinancing boom. "We certainly don’t expect that to continue at this pace, but it’s been a fantastic way to start the year," he said.
Bankrate also announced two new acquisitions — InsureMe Inc. and Lower Fees Inc. — which are expected to help boost revenues by at least 75 percent this year.
Bankrate said it paid $65 million in cash for InsureMe, which operates a Web site and a network of affiliates that offer consumers rates for auto, home, life, health and long-term-care insurance. Bankrate could pay another $20 million in cash under the terms of the deal if the company hits financial targets over the next two years.
Fee Disclosure, which provides consumers with information on mortgage transaction and closing fees, was acquired for $2.85 million in cash.
Bankrate also disclosed that it completed its $27.4 million acquisition of Memphis, Tenn.-based Nationwide Card Services Inc. on Dec. 7. Bankrate could pay another $7 million for NCS, which markets credit cards over the Internet, if the company hits performance targets over the next two years.
Another acquisition, Savingforcollege.com, was completed on Dec. 5. Bankrate acquired the site, which provides information about more than 500 college savings plans, for $2.3 million in cash and up to $2 million in potential earn-outs depending on the company’s future performance.
Bankrate said the acquisitions, along with at least 25 percent growth in the company’s core business, should help it grow revenue from $95.6 million in 2007 to between $167 million and $172 million in 2008.