IAC/InterActiveCorp (NASDAQ: IACI) needs to build up its little Ask.com franchise before it is spun out in a breakup of the parent company. Ask.com is an "also ran" in the search engine fight which includes Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO).
In an attempt to turn a loser into a contender, IACI is buying Lexico, which owns Dictionary.com, Thesaurus.com and Reference.com. According toThe Wall Street Journal, "Lexico sites drew about 15.6 million unique U.S. visitors in March, according to comScore Inc., compared with 55.4 million for Ask and an array of affiliated sites."
Even if the price of the new addition is low, the Lexico sites are not likely to do much good for the Ask.com franchise. It has already fallen so far behind the three search leaders that it almost certainly cannot catch up. Internet users have already set their preference in this part of the online market. Owning a dictionary site is not going to help that.
IACI's Ask.com can't come from behind and buying additional reference sites is not going to change that.
CBS Corp. (NYSE: CBS) announced Thursday it has signed a deal to buy CNet Networks Inc. (NASDAQ: CNET) for $11.50 a share in cash. CNet operates not only the CNET site, but also ZDNet, GameSpot.com, TV.com, mp3.com and others. The deal values CNet at about $1.8 billion and push CBS to among the 10 most popular Internet companies in the United States. CBS shares are down 2.9% in premarket trading while CNET shares are of course up over 42% to $11.31.
IAC/InterActiveCorp (NASDAQ: IACI)'s Ask.com has bought Lexico Publishing Group LLC, the parent of Dictionary.com, Thesaurus.com and Reference.com among other sites. Earlier this year, Lexico already agreed to be sold to Answers Corp (NASDAQ: ANSW), but the latter couldn't secure the necessary funds. Now, Lexico sold itself to Ask.com, for an undisclosed amount, although the number people are throwing around is $100 million. Could this acquisition help IACI gain -- even a little -- on market leader Google?
United Airlines (NASDAQ: UAUA) and Continental Airlines Inc. (NYSE: CAL), dropping ideas of a merger, are now talking about forming an alliance to still gain some benefits of working together. United appears relentless in its attempts to help its bottom line through a merger or an alliance. While talking to Continental about an alliance, it is still negotiating with US Airways Group (NYSE: LCC).
In a move to help turnaround its troubled business, General Electric Company (NYSE: GE) will sell or divest its appliance division, and could expect to receive between $5B and $8B for the unit, according to the Wall Street Journal. Potential buyers appliance makers BSH Bosch & Siemens Hausger of Germany and Haier Group of China, as well as private equity firms and Controladora Mabe, GE's partner in Mexico.
The Wall Street Journal also reported that Comcast Corporation (NASDAQ: CMCSA) will acquire Plaxo, a networking Web site, in an effort to increase its range of services. Terms of the deal were not disclosed.
To help improve its Ask.com search engine, the Wall Street Journal reported that IAC/InterActiveCorp (NASDAQ: IACI) will buy the Lexico Publishing Group, which owns Dictionary.com, Thesaurus.com and Reference.com.
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Citing the New England Journal of Medicine, Bloomberg reported that migraine headache medicines, including Merck & Co Inc's (NYSE: MRK) Maxalt and GlaxoSmithKline Plc's (NYSE: GSK) Imitrex caused potentially fatal reactions in at least 11 people. The Journal said people using "triptans," an older class of migraine drugs, could develop serotonin syndrome, which may cause fever, shock, vomiting and rapid heartbeat.
If you thought the news going to be the actual FOMC cut was the key today, it wasn't. The bias and tone for more rate cuts was the most important, and the tone was not hawkish enough. Traders wanted to see a signal of the end of rate cuts, at least for now, so that oil and gold would tank and that the dollar would recover.
GDP came out and showed a +0.6% gain, meaning the official recession isn't technically here yet. Warren Buffett said it is, and he might be good enough of a judge over anyone. Regardless, this is the first positive month for the S&P after it just missed a positive month in March.
Below are the unofficial closing levels for key US index levels:
Buffalo Wild Wings (NASDAQ: BWLD) was upgraded by KeyBanc Capital Markets to Buy and by Cowen & Co. to Outperform. Yesterday, Buffalo Wild Wings reported strong quarter results with a 22% revenue boost and earnings meeting street expectations. Shares were up 18% to $30.74 in the final minutes of the day.
According to the New York Post, IAC/InterActiveCorp. (NASDAQ: IACI) Chairman Barry Diller is expected to meet with his board this week to restart the process of breaking up his company into five separate pieces, sources said. At the same time, Diller and Liberty Media Corporation (NASDAQ: LMDIA) Chairman John Malone are continuing to talk about a deal that would trade one or more of IAC's assets for Liberty's ownership stake in IAC.
The UK Times has learned that Numis Securities, the stockbroking group headed by Michael Spencer, is in "advanced talks" to buy the UK equities business of The Bear Stearns Companies Inc (NYSE: BSC). Numis may look to hire a team of 25 from Bear.
Kirk Kerkorian's Tracinda Corp. is planning to offer $8.50 per share for up to 20 million shares of Ford Motor Co. (NYSE: F), a 13.3% premium over Friday's close. Tracinda now owns 100 million Ford shares, or 4.7% of the outstanding stock, which would increase to 5.6% when the offer is completed. Ford shares climbed over 6.5% in premarket trading. The deal, announced recently, is helping stock futures' upward movement.
Verizon Communications Inc. (NYSE: VZ) reported a 9.8% rise in its first-quarter earnings as its wireless division attracted more customers than other carriers. Excluding items, earnings were 61 cents per shares, inline with estimates. Revenue rose 5.5% to $23.8 billion, also inline with estimates. VZ shares are up 1.9% in premarket trading.
According to The New York Post, Barry Diller and Liberty Media (NASDAQ: LINTA) Chairman John Malone are continuing to talk about "a deal that would trade one or more of IAC Interactive (NASDAQ: IACI)'s assets for Liberty's ownership stake in IAC." Diller is also "expected to meet with his board this week to restart the process of breaking up his company into five separate pieces."
The Wall Street Journal also reported that IAC/InterActiveCorp (NASDAQ: IACI) is planning to launch a number of new web sites, and hopes to capture a variety of audiences including African-Americans, children and news followers.
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Lehman Brothers Holdings Inc. (NYSE: LEH) said it liquidated three investment funds, with assets valued at $1 billion as of February 29, because of "market disruptions," Bloomberg reported.
Reuters reported that the U.S. Department of Defense approved the sale of 157 armored trucks to Britain. The trucks are built by Force Protection Inc. (NASDAQ: FRPT), and the deal is valued at $125 million if all options are exercised.
Barry Diller has won his dispute with John Malone. Malone's Liberty Media (NASDAQ: LCAPA) owns a a large piece of the company that Diller runs, IAC/Interactive (NASDAQ: IACI). Diller has the right to vote those shares under a long-standing agreement.
Diller has decided to break IACI into five companies because the businesses in the firm do not have significant relationships to one another. Malone wanted to block the break-up and filed suit in court.
According toMarketWatch, "Vice Chancellor Stephen Lamb ruled Friday that "Liberty has failed to demonstrate that Diller has breached or threatened to breach any contractual duty he owes to Liberty," according to Lamb's 78-page opinion."
Diller can now complete his plans.
That leaves open the question of whether IACI is worth more in pieces than it is as a conglomerate. The firm's stock trades at $20, near its 52-week low and down from the period high of over $39. Some of the company's divisions, especially Lending Tree and HSN had tough years in 2007. These would get very low valuations as independent operations and might not make up for the value of more attractive operations like Ask.com
Diller may have gotten his way, but it is not clear that it will help shareholders.
Douglas A. McIntyre is an editor at 247wallst.com.
InterActiveCorp (NASDAQ:IACI) and Liberty Media (NASDAQ:LINTA) have sued each other over IACI's planned breakup into five separate businesses. A Delaware Chancery Court Judge is expected to issue a ruling soon. IACI announced the plan to separate IACI into five publicly traded companies on November 5, 2007:
1) HSN, will include business comprising IACI's retailing segment; 2) Ticketmaster; 3) Interval International, which will include CondoDirect, Resort Quest Hawaii and VacationSource; 4) LendingTree, which will include RealEstate.com Domania, GetSmart, Home Loan Center and iNest; and 5) IAC media & advertising, Ask.com, Bloglines, City Search, Cursor Mania, Evite, Excite, insiderpages, iWon, My Fun cards, Black Web Enterprises Shoebuy.com, Match.com.
IACI April option implied volatility of 47 is above its 26-week average of 38 according to Track Data, suggesting larger risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
It is no secret that AOL has been under the microscope of Wall Street, Main Street, and even Silicon Valley. There has been growing talk that a deal could be in the air, and talk may ultimately lead to reality. The New York Times notes that Time Warner Inc.'s (NYSE: TWX) CEO Jeff Bewkes may be open to a deal or "whatever configuration makes it the strongest and the most valuable."
AOL's primary strategy is to expand its advertising on Platform A, which is a combination of advertising and technology companies that AOL has purchased over the years. Executives see the expansion of their advertising network as the only way to compete and have discussed spinning off the dial-up portion of the business.
Two years ago, Time Warner discussed a merger with AOL and Microsoft Corp. (NASDAQ: MSFT) for its online operation and has recently explored a potential deal of some sort with Yahoo! Inc. (NASDAQ: YHOO). Keep in mind, Google Inc. (NASDAQ: GOOG) owns a 5% stake in AOL, so the world can still change rapidly.
Will InterActive Corp. (NASDAQ: IACI) be dumping its search and information portal Ask.com? Sort of, according some insider accounts. It wouldn't be jettisoning Ask.com entirely -- it would just be getting rid of the technology that powers the search engine's results. The engine behind Ask.com, Teoma, could be taken out and replaced by Google, Inc. (NASDAQ: GOOG)'s technology.
Google already has a stranglehold on internet search. It's been suggested for quite a while that Yahoo, Inc. (NASDAQ: YHOO) dump its pride in its search engine technology (known as Project Panama for the last few years) and just use Google instead for powering its search engine. Does Google have that much power -- one that would make competitors use its search engine technology to power their own sites? Yes, it does.
If Ask.com were to switch to just using Google, then the search service really would hold little value to the customers using it. Sure, Ask.com would wrap Google search results in its own brand and customer interface, but would there truly be a compelling reason to use Ask.com at that point? Not really. Just like Yahoo!, Ask.com has spent huge amounts of cash to improve its search technology with little to show for it.
That's the first-mover advantage Google has. Even if either had a better search service, that wouldn't mean more search customers. Then again, does either have a superior search service? I personally use Ask.com daily in addition to Google -- it's great. For my sole search engine service, though, it's not that good.
After over a week of rumors all over the blogosphere, Apple Inc. (NASDAQ: AAPL) finally announced Tuesday it was introducing new models of the iPhone and iPod touch which have double the memory. The iPhone now comes in a new 16GB model for $499 , joining the 8GB model for $399 . iPod touch now comes in a 32GB model for $499 , joining the 16GB model for $399 and the 8GB model for $299. Now we'll have to wait and see if the rumors about the new MacBook Pro are also true.
The Wall Street Journal reports that Yahoo Inc. (NASDAQ: YHOO) is studying alternatives to Microsoft Corp (NASDAQ: MSFT)'s unsolicited $44.6 billion takeover offer, including the emergence of a rival bidder or a business tie-up with Google Inc. (NASDAQ: GOOG) that might allow it to remain independent. According to "people familiar with the matter," Google believes there would be too many antitrust hurdles to a straight bid. Meanwhile, according to the WSJ's sources, possible bidders such as AT&T Inc. (NYSE: T), Comcast Corp. (NASDAQ: CMCSA), News Corp. (NYSE: NWS), Time Warner Inc. (NYSE: TWX) and Verizon Communication Inc. (NYSE: VZ), aren't considering offers.
As there are no time constraints on the offer and while Yahoo! is studying it, some analysts believe Microsoft would raise its bid. According to Reuters, "UBS on Tuesday set a price target for Yahoo shares above Microsoft's $31 offer and Citi said a raised Microsoft bid was the most likely of five scenarios it saw..."
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Here are some highlights from this past week's 
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Oil hits record $127.43 on supply concerns, raised Goldman forecast
Icahn's 'shock and awe' on Yahoo -- a gutsy play
Housing starts surprisingly rise in April on apartment construction
