Seeking Alpha
Research analyst, growth, value, IPOs
Profile| Send Message|
( followers)  

Today, IAC/InterActiveCorp (NASDAQ:IACI) announced its second big acquisition in the month of August. The company is acquiring Datehookup.com, which will become a part of its large online dating portfolio that includes match.com and OKcupid.com. The company's online dating segment saw 2011 revenue of $500 million.

Datehookup was founded in 2002 and has increased its traffic dramatically since then. The site is now the sixth most visited online dating website with one million monthly visitors. The dating site is ad supported and should boost Interactive's 2012 revenue from the online dating division. Back in 2011, Interactive acquired OKcupid for $50 million and has fit it in nicely with its dating division dominated by Match.com.

Earlier in August, Interactive Corp. beat Answers.com for the content giant About.com from the New York Times (NYSE:NYT). Interactive paid $300 million in cash, beating Answers.com first offer of $270 million. About.com will become part of Interactive's Ask.com unit. About.com comes to Interactive with 1000 topic sites and 90,000 topics covered. The content site has over three million articles and sees 100 million monthly users.

Interactive Corporation has a large portfolio of websites that generate over one billion monthly visitors. Among the company's assets are:

· Ask.com

· Citysearch

· College Humor

· Daily Burn

· Dictionary.com

· Iwon

· Match.com

· Okcupid.com

· Urbanspoon

· Reference.com

Shares of Interactive sit at $52.29, approaching the company's fifty two week high of $54.20. In 2012, shares have gone up 23%. The company has over $10 a share in cash prior to the acquisitions. Interactive needs to take advantage of these deals to boost its annual revenue as shares look expensive on a straight price to earnings basis.

In the September quarter, analysts (Yahoo Finance) are expecting Interactive to report earnings per share of $0.67 from $692.5 million in revenue. For the fiscal year, analysts see earnings per share of $2.82. The following year, analysts see earnings per share of $3.55. With a share price of $52.29, Interactive is trading with a current price earnings multiple of 18.5, and a forward multiple of 14.7.

A new acquisition target for the company could be Local.com (NASDAQ:LOCM). I picked Local.com as one of my top ten stock picks for 2012. Shares are now under $2 and the company trades with a market capitalization of under $50 million. The company's local search assets would pair nicely with Interactive's current search portfolio.

Interactive has also been quick to spin off assets to unlock shareholder value. Over the past several years, the company has split off Tree.com, Home Shopping Network, and Ticketmaster. The company could spin off its online dating segment or its search business to unlock additional shareholder value.

I have a neutral rating on Interactive as they approach their fifty two week high. Patient investors could be rewarded if a spinoff announcement was made. Investors could also be rewarded as Interactive updates its fiscal year revenue and earnings targets after these recent deals.

Source: IAC Continues Acquisition Spree