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AUSTIN, Texas - Oakland, California-based Internet search and media firm Ask.com today saw the stock rating  of its $10 billion parent company InterActiveCorp (IAC) downgraded from "buy" to "hold" by financial services company Citigroup. The change was made in part due to concerns that IAC, a media conglomerate of some 60 companies led by CEO Barry Diller, is facing decreased market share in its key businesses and less international exposure than other Internet companies, according to Citi Investment Research analyst Mark S. Mahaney. IAC's Ticketmaster recently saw its largest ticketing customer Live Nation, which accounts for up to 15 percent of the firms bookings, pull out of a contract, Mahaney said in a recent article in Forbes. Mahaney also cited IAC property Home Shopping Network's increased competition from QVC, Inc. as a factor in his firms decision to downgrade IAC's stock rating. Mahaney lowered the price target for IAC from $29 to $26.99 per share in a note to clients. Mahaney noted that IAC's international market revenue stands at 13 percent. IAC Troubles IAC, which also owns the Lending Tree property, may lose market share in 2008 according to Mahaney, a  prospect he sees as critical to the company's future. "Our read is that companies that have demonstrated market share gains in their core segments have had their above industry growth rates rewarded by the financial markets with higher or expanding multiples," said Mahaney. Ask.com, the fourth most popular search engine according to November figures from Web traffic analysis firm comScore, may be one of IAC's better performing holdings, however Mahaney sees difficulties competing with search leader Google and second place Yahoo, and noted that Google's reach appears to be expanding at the expense of Ask.com. Ask.com Parent Company IAC Stock Downgraded Some search industry analysts consider Ask.com to be a possible buyout target in 2008, such as New York Times writer Saul Hansell. "What sort of deals can Barry Diller do (other than sell the company to someone who wants Ask.com's search market share)?", Hansell asks in a recent Times article. Others see IAC stock as a good buy presently, such as Rick Aristotle Munarriz of The Motley Fool. "Traffic is growing at IAC's Ask.com, though it hasn't been enough to make much of a dent in the leading search engines," Munarriz wrote in a recent Fool article. In December 2007 IAC reached an agreement with online video and television distribution service Brightcove, one month after Diller split the company into five separate entities, a move longtime IAC financial backer John Malone saw as a positive step. "From our point of view, each one of these businesses will be more valuable," said Malone in a Wall Street Journal article. At the end of 2007 IAC stock closed near its low for the year, after falling since the announcement that it would split into five companies. Mahaney notes however that IAC is expected to see increased revenue and margins in 2008. Related Links:
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10:17 pm on Jan. 2, 2008 (utc 0)