Financial Reports: IAC,

Sales Growth Doesn’t Prevent Income Plunge at IAC
Fourth-quarter net income at New York-based IAC/InterActiveCorp. rose 8%, to $1.82 billion for the three months ended Dec. 31, 2006. IAC’s total revenue for the full year hit $6.27 billion, reflecting nearly 16% growth. IAC includes home-shopping network HSN, the Cornerstone Brands catalogs, and search engine

Fourth-quarter sales for the U.S. retail division, which includes the catalogs, rose 4%, to $877.7 million. The February acquisition of online merchant Shoebuy accounted for much of the growth, as did an increase in the average price points among the catalogs and a decrease in returns. IAC’s catalogs include Frontgate, Garnet Hill, Improvements, and The Territory Ahead.

Fourth-quarter net income for the company as a whole, however, fell 85%, to $16.7 million from $113.1 million the previous year. For the year, net income sunk nearly 78%, to $192.6 million from $868.2 million for 2005.

Sales Down, Loss Up at
Sales at Salt Lake City-based slid 6% and 1%, respectively, for the fourth quarter and full year ended Dec. 31, 2006. Fourth-quarter revenue was $297.4 million, compared with $317.9 million for the fourth quarter of 2005. For the full year, sales were $796.3 million, down from $803.8 million the previous year.

The online closeouts merchant registered a full-year gross profit of $101.6 million, reflecting a 16% dip from the previous year. And it incurred a net loss of nearly $97 million for the full year, compared with a net loss of nearly $25 million last year.

“The fourth quarter was a difficult end to a tough rebuilding year,” CEO Patrick Byrne said in a statement. “We paid the price for hastily implemented system upgrades of 2005 and the subsequent troubles caused by them. Q4 sales declined 6%, the same percentage decline we experienced in Q3. Lower traffic was partly to blame, and we didn’t improve conversion enough to achieve positive growth. In addition, we consciously and aggressively discounted old inventory during the quarter, and as a result, our gross margins were negatively impacted. However, we did this to significantly clean and reduce our inventory, and we were successful in doing so. This was painful, but it was a necessary step in improving our direct business.”

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