IAC 1Q Results Reflect Drop in HSN Sales

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IAC/InterActiveCorp. yesterday reported a 36 percent increase in revenue during the first quarter of 2006 to $1.55 billion. However, the company's net income dropped 32 percent to $47.2 million, based in part on declining sales at HSN.

HSN's overall revenue declined year-over-year primarily because of disappointing merchandising performance, particularly TV sales of products in the Health & Beauty, Home Fashions and Home Hard Goods categories, according to a statement from the company. This was partially offset by double-digit growth at HSN.com.

HSN's sales were also adversely impacted by higher overall return rates in several product categories, as well as product mix shifts into categories with generally higher average return rates on relatively flat unit volume and average price point.

The retail segment of the company, which grew 28 percent during the quarter to $769 million in sales, was positively affected by the acquisition of catalog company Cornerstone Brands last year.

Media & advertising results show a 1,208 percent increase in sales and reflect the inclusion of Ask.com, which was acquired in July 2005. According to the company, Ask.com's share of U.S. search queries was 5.9 percent in March, up 7 percent over the prior year.

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