Mindspark Parent Company IAC Announces Q3 Earnings

The New York-based company will pay a dividend of 12 cents a share, starting in December, costing about $9.8 million a quarter. The move is notable because fast-growing companies, such as those in the Internet sector, typically preserve cash for expansion rather than return it to shareholders.

On an analyst call, IAC Chairman Barry Diller, noting IAC has increased earnings for seven consecutive quarters and generates plenty of cash, made clear he disagreed with that philosophy on cash.

"For those people who think that companies signal that they're no longer growing and that's why they institute dividends, I mean I think that's ridiculous," he said during a conference call with analysts.

"If I owned a stock, it is the characteristics that I would want," he added. Mr. Diller owns about 5.7 million shares in IAC, entitling him to about $695,000 in dividends a quarter or about $2.78 million annually.

Introduction of the dividend follows several years of aggressive stock buybacks. IAC has repurchased 42% of its shares in the last three years. It most recently bought back 3.6 million shares of common stock between July 23 and Oct. 28 at $139 million in aggregate. The buybacks have helped shrink IAC's total of cash and marketable securities to about $865 million at Sept. 30 from about $1.8 billion at the end of 2008.

"IACI continues to define itself (ironically) as the most shareholder friendly company in the Internet space," Ross Sandler, and Internet analyst with RBC Capital Markets said in a research note. IAC shares were up 6.6% in early afternoon trading on Thursday.

In the quarter, IAC reported a profit of $65 million, or 69 cents a share, up sharply from $17.5 million, or 16 cents a share, a year earlier. Revenue jumped 25% to $516.9 million.

Revenue from search operations increased 33%, helping the segment show a 56% jump in operating profit. While IAC's best known search business is Ask.com, IAC credited the uptick to its digital consumer products business Mindspark, which generates revenues through search functions, as well as local content and advertising network CityGrid Media.

IAC's Match.com's revenue climbed 25% to $132.3 million, though operating profit slipped due in part to fees and $9.6 million in deferred revenue related to the acquisition of 81% of France-based personals company Meetic. Core revenue from the dating sites Match.com, Chemistry.com and People Media increased 15% due to a boost in the number of subscribers.‪

Executives signaled a continued appetite for acquisitions in the personals category. "This is going to be a world-wide market, so to speak, which is being able to really allow relationships to happen," Mr. Diller said.