Internet conglomerate IAC/InterActiveCorp, preparing to spin off four of its operating units, said late Tuesday it plans to take about $170 million in charges because the housing crisis has diminished the value of its mortgage and real estate businesses.
The New York-based company revealed in a regulatory filing that it will have to write down the value of its lending unit, which includes the LendingTree.com Web site, by $100 million.
Its real estate segment, which includes the RealEstate.com Web site and related brokerage businesses, will take a $70 million hit because of damage to their goodwill, which refers to intangibles such as reputation or perceived value to the market.
IAC said the company had to adjust its valuations of the business units because their future profitability has been hurt by the mortgage mess and its fallout.
Deepening distress in the housing market has led to turmoil at financial institutions as borrowers have defaulted on their mortgages, a trend that has spiraled into a big problem for the U.S. economy as financial institutions write down billions of dollars from their businesses and cut jobs.
The Barry Diller-led company's filing with the Securities and Exchange Commission indicated that it too had been clipped by the worsening economic problems, as the turmoil has reduced the value of its real estate and home financing oriented businesses.
That reduces their value as they become independent companies. IAC plans to take the charges in the reporting period for the six months ended June 30.
IAC is planning to split into five publicly traded companies in a restructuring expected to be completed by August.
IAC will remain a primarily media-focused company based around the Ask.com search engine and other Web sites. The segments that are being spun off include the LendingTree lending and real estate unit, the HSN home shopping unit, the Ticketmaster event ticketing unit, and the Interval time-share unit.
IAC shares gained 47 cents, or 2.7 percent, to close at $18.19 during the regular session before the accounting charges were disclosed.
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