IAC/InterActiveCorp (NASDAQ:IACI) shares tumbled nearly 20% today after the company reported a nearly 25% decrease in its second-quarter profit and disappointing revenues. It also ratcheted down its expectations to the low range of its previous levels, with the second half of the year presented as challenging, with cooler growth.

Although InterActive did meet Wall Street expectations with earnings of $174 million, or $0.22 per share (excluding certain items; otherwise, profits decreased), gross bookings decreased from last quarter. Revenues increased 17% to $1.5 billion, while sales in the travel segment rose by 34%.

The travel business proved an Achilles heel. (Note that rival Priceline.com (NASDAQ:PCLN) recently admitted to a similar outlook.) The company cited "cyclical concerns" that prescribe a weaker second half.

In hotels, resumed traveling meant hotel occupancy rates increased, so discount deals were harder for InterActive to come by. In addition, there was direct competition from some hotels themselves, as well as rival Travelocity's stepped-up presence in the arena.

InterActive admitted slowness in its Hotwire unit but denied any structural problems in its overall business in its conference call (transcript courtesy of Thomson StreetEvents; registration required). It also denied that it's losing any substantial market share, pointing to its "wide leadership gap" in the industry. Chairman and CEO Barry Diller emphasized that people shouldn't panic and think InterActive's travel business (its largest) is in danger. However, other areas showed signs of weakness too.

For example, anyone who was hoping that InterActive's online dating business, which includes popular Match.com, would offer some easy money: not so fast. Second-quarter revenues there were flat. Competition's been mounting just as online dating has gained acceptability, and the space has been seen as one that the public's throwing money into. InterActive said that a 16% upswing in sales was offset by costs associated with reduced prices for long-term subscribers and marketing campaigns.

Sure, all that Internet real estate, even beyond travel and matching, likely makes InterActive a tempting stock for some. Count in Citysearch. Yesterday it announced it would provide local content to Ask Jeeves (NASDAQ:ASKJ), though one might wonder about the competing local offerings from Google, Yahoo! (NASDAQ:YHOO), and Time Warner's (NYSE:TWX) AOL. Other InterActive untis include Home Shopping Network, Ticketmaster, and LendingTree.

However, despite having planted itself in hot markets, it's got fierce name brand (or aggressive upstart) rivalry. In travel alone, the company's facing Priceline, Orbitz (NASDAQ:ORBZ), and Sabre Holdings' (NYSE:TSG) Travelocity.

Investors had an extreme reaction this morning. However, maybe they have good reason to fret. Since the winter months, many have predicted an increased interest in travel and vacation this year, compared with last year's war and economic worries, so it's understandable that investors might wonder, where's the reward? InterActive's psyched for 2005, for which it predicts sustained growth -- it appears that feels like too little, too late for some skittish investors.

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Alyce Lomax does not own shares of any of the companies mentioned. She often wishes InterActiveCorp had a more catchy, meaningful name.