As a clerical error sent IAC/InterActive’s shares tumbling, the company said it expects losses from Newsweek Daily Beast, headed by Tina Brown, to reach $40M. (WireImage)
The losses for Newsweek Daily Beast will continue long after parent IAC/InterActiveCorp scraps the print edition of Newsweek at the end of the year.
Barry Diller’s IAC said yesterday that the media group will lose about $40 million this year — slightly higher than previous estimates — and $23 million in 2013.
Diller also told Wall Street that he expected no contribution to the bottom line for several years from Newsweek, which will go to an all-digital format in January.
“We made the right and painful decision to cease printing,” Diller said during an analyst call to discuss third-quarter results. “We know the results from that will dramatically decrease losses in the future.
“There’s real enthusiasm for Newsweek Global on all digital platforms, but we have no stars in any of our eyes,” he added.
Even worse, investor confusion over the projected loss for the media division took its toll on the entire company, which owns Web properties including Match.com, Dictionary.com and Ask.com.
A clerical error by StreetAccount misinterpreted the $23 million loss as being for the entire company, triggering a sharp sell-off.
IAC shares tumbled as much as 14 percent before trading was halted to sort out the error. By the end of the day, the stock had recovered some but still closed down 8.4 percent at $48.
The midmorning glitch only came to light when Oppenheimer analyst Jason Helfstein pointed it out during the earnings call.
“Of course it is incorrect, but how could that happen?” asked a flustered Diller.
Instead of a loss, IAC CEO Greg Blatt said the overall company is actually predicting double-digit revenue and profit growth on a consolidated basis in 2013.
For the third quarter, revenue, which included the contributions of recent acquisitions About.com and online dating site Meetic, grew 38 percent to $714.5 million.
Operating income rose 44 percent to $106.6 million. Net income fell to $40.7 million from $65 million last year. The year-ago quarter included a tax benefit from IAC’s investment in Meetic.