On the heels of last quarter's earnings report, InterActive (NASDAQ:IACI) shares took a nosedive as the company disappointed and its outlook shook investor confidence. (See InterActive Panic and InterActive Complications.)

However, InterActive shares shot up 15% to $25.28 in afternoon trading after the company posted stronger-than-expected earnings, bought back what many consider to be undervalued shares, and authorized a larger share-repurchase program.

For the third quarter, InterActive saw operating income before amortization (OIBA) grow 32% to $253 million. Meanwhile, adjusted net income increased 40% to $181 million, or $0.24 per share, beating the analyst estimate by three cents. On a "comparable net basis," revenues combed 13% to $1.5 billion.

IAC Travel led the way, as comparable net revenues for the flagship segment grew 24% to $570 million. That unit, which includes such Web properties as Expedia.com, Hotels.com, and Hotwire, managed to increase OIBA by 27% to $175 million. International revenues climbed 74%, or 64% if you account for the value of the U.S. dollar, because of strong growth in the UK, Germany, and Canada, as well as a pair of acquisitions.

The inclusion of Hotwire boosted merchant hotel revenues by 22%, with a 16% increase in room nights stayed. Revenue per-room-night also increased 3%. However, the company expects a "challenging environment" to continue to put a damper on growth rates.

One nagging factor is strong competition from companies such as Priceline.com (NASDAQ:PCLN) and Cendant's (NYSE:CD) soon-to-be acquired Orbitz (NASDAQ:ORBZ) (see Out of Orbitz). In addition, hotel chains, including casino operators such as Caesars Entertainment (NYSE:CZR) and Mandalay Resort Group (NYSE:MBG), as well as chains such as Marriott (NYSE:MAR), are increasingly promoting their own websites. A final challenge: Increasing occupancy rates are leading to a decrease in "favorably priced inventory."

IAC's second-largest segment, the Home Shopping Network (HSN), also saw improved results. Overall, revenues in that segment increased 4% to $544.7 million, leading to a healthy 23% gain in OIBA to $52.4 million.

Ticketmaster, IAC's third-largest segment, grew revenue by 2% to $182.0 million, as an 8% increase in average revenue per ticket outpaced a 5% decline in ticket volume. The Summer Olympics in Athens, as well as a recent acquisition in Sweden, bolstered the segment's results. However, OIBA remained flat at $32.4 million.

IAC shares had been cut in half off from the highs set last year, and they are bouncing off their recent lows of just under $20. Meanwhile, the company is still generating cash by the bucket load and has continued to move to deliver value.

Through nine months, IAC has generated $866.1 million in free cash flow, down from $1 billion through the same period last year because of increases in working capital and capital expenditures.

But IAC used that cash during the quarter to buy back 7.7 million shares at an average price of $23.20 per share. In its earnings release, the company announced that an 80-million-share buyback program has been authorized, on top of the 22.8 million shares remaining under previous programs.

It's still hard to get your hands around InterActive -- a company with a zillion different business units. But the gist is that the company has three large units -- IAC Travel, the Home Shopping Network, and Ticketmaster -- accounting for 86% of its revenues and just about all of its income. These businesses generate all kinds of cash, which makes it possible for the company to explore the other areas -- online dating, financial services, etc. -- in search of profitable growth.

The bottom line: I believe there's a lot to like here -- but if acquisition sprees and odd terms such as OIBA scare you, then InterActive can be an easy company to avoid.

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Fool contributor Jeff Hwang owns shares of InterActive Corp.