Welcome to the IAC fourth quarter earnings conference call. (Operator Instructions) I would now like to turn the conference over to Tom McInerney, Executive Vice President and Chief Financial Officer. Please go ahead, sir. Tom McInerney: Thanks everyone for joining us today. Before I begin, let me remind you that during this call we may discuss our outlook for future performance. These forward-looking statements typically are preceded by words such as we expect, we predict, we anticipate, or similar statements. Also, you are aware that there are risks and uncertainties associated with these forward-looking statements, and our results could be materially different from the views expressed today. Some of these risks have been set forth in our earnings release filed earlier today with the SEC and our other publicly filed reports. We will also discuss certain non-GAAP measures. I refer you to our press release and the investor relations section of our web site for all comparable GAAP measures and full reconciliations. I will highlight a few items in our financial results before turning it over to Doug and Barry. The results are clearly laid out in the first and second page of our release, so I don't want to repetitiously read from there, but let me quickly make a few observations. All in, the quarter was very much as expected. Adjusted EPS was up 35% year over year, but this reflects an unusual tax effect which unexpectedly lowered our rate in Q4. At a more comparable rate to what we saw a year ago, we still achieved double-digit adjusted EPS growth reflecting the positive impact of the share repurchases we executed over the course of 2006. We finished the full year of 2006 at 23% adjusted EPS growth. At a tax rate comparable to the prior year, it would…

Good morning, everybody. Well, you've had a good review, I think, of our operations. Since I spent some time in our December call going through strategy, I don't think I'm going to take up any more of your time. The only thing I will do just for a second is just to remind you of these three strategies that we have, which the first is growing our business. You've just heard about that. The second is grow Ask and integrate value-added content from across IAC. You've heard a little bit about that. The third, which Doug just spoke to, was all of the cross-company work, the best practices work that we're doing. Those are our three strategies; that's what we are focused on. With that, we will take questions.

(Operator Instructions) Your first question comes from Justin Post - Merrill Lynch.

A couple of things--first, can you talk about the network growth at Ask, why that was so strong and what you are really doing there to drive that growth, and how you think that benefits your core Ask business, just having greater reach? Secondly, I just noticed that HSN inventory looks like it's kind of flat. Do you think you have enough inventory there to really drive growth this year or is that not really a focus this year?

First, on Ask, yes is the answer. All of the efforts that we're making, we've been marketing Ask; we've been introducing new products on Ask as Doug mentioned, I think, relative to some of our consumer applications, that helps the Ask network. Every little part of the company is, in various ways, contributing, including Ask itself and its own marketing, to growing Ask. That's our strategy and we're pleased with the progress. I think this is a year where, hopefully, we're going to see much greater progress, but certainly this last year, we were trying different things, we had different concepts that we would take out. Of course, when you are doing that, some avenues work, some don't. I think we're much more sure now about what needs to be done in '07 and hopeful that '07 will show the actual outward signs of that. As far as HSN, Tom, why don't you do that.

Actually, the inventories are good. We actually finished the year a touch higher than we would like, actually so I think as we went into January, we moved some clearance through. I don't think it's usually problematic or anything like that but we are in pretty good shape, a touch higher than we would have liked but generally fine.

Your next question comes from Imran Khan – JP Morgan. Imran Khan – JP Morgan: Good morning, Barry, Tom and Doug. If I look at your Internet business for the HSN part of the business, it grew as a percentage of revenue but it's still growing slower than the ecommerce growth rate. I was wondering what can you do to drive the growth business faster and if you see any margins improvement as you probably need only to pay the MSO fee? Secondly, on a proprietary versus network traffic growth, is there any new contract listed or is there any new relationship that could potentially come up for renewal that would create further margins pressure? Thank you.

Yes, I will take them in order. On HSN.com, the growth was about 10% up in the quarter, year over year, and I think you are right; it's slower than probably the ecommerce or eretail industry generally. It has always had both its own growth drivers as well as tied to the HSN network overall. I think, through a whole series of initiatives, some of which we've done, a couple of which Doug spoke on in his remarks in terms of where we're going, over time the goal is to get those growth drivers firing more independently of the television network. It runs the gamut from merchandising assortments, marketing, SEL, SEM, video. We're planning a big revamp of the site this year. There's thousands of videos that are now out there in various places, in search engines and the like. So, it's all kind of the ecommerce fundamentals. But because it's the HSN brand and it drafts off of the promotion on air, it's always going to correlate to the overall top line performance while hopefully growing faster. On the second question, our network activities run the gamut, both from various toolbar activities, private label portal activities, and the syndication of both our own ASL search products as well as Google search products on the advertising side, so there's a whole range. We did add a bunch of new deals but I think there's no one deal that's materially skewing the results. We've got good activities there. We've figured out who the right partners are for each of those products. It's profitable business and supports us both financially and strategically, so it's pretty broad-based growth.

Thank you. Next question, please.

Your next question comes from Anthony Noto - Goldman Sachs. Anthony Noto - Goldman Sachs: Thank you very much. Tom, I was wondering if you could comment on the organic, excluding FX benefit, revenue growth in the quarter, versus the 7.8% that you reported. Then Barry and Tom, I'm just wondering if you could talk philosophically more about the stock buyback. Specifically, you bought back an accelerated amount of shares since the beginning of the year compared to what you did in the fourth quarter. What would drive that acceleration? Was there some limitation that you had in the fourth quarter or something that you're seeing differently in the business to increase your desire to want to buy back stock in this one-month time period compared to what you just did over a three-month time period? Is there a more efficient way to buy back more stock through some type of Dutch tender like you did with Expedia or some other methodology?

Anthony, the FX added about 90 basis points to that 7.8% growth. So, it would be 6.9%, excluding the help we got there. Primarily in Ticketing and Interval was where the pieces were. Anthony Noto - Goldman Sachs: Okay, and the acquisitions were minimal?

Yes, the acquisitions were really negligible for the quarter, very small.

But Anthony, as we've talked, we certainly don't believe anything less than double-digit growth is acceptable for the company. That's certainly our plan for the year. As it relates to stock, we think we are as efficient as you can be in this. We bought back stock primarily if you look back I think of the $1 billion-plus the we've spent buying stock back, our average prices probably $26, $27, including the most recent purchase, so it depends on where you put the stick in. There was no technical reason why we bought when we bought. We, as we've said before, were opportunistic about this. We buy when we think is the best time to buy. Sometimes a good deal over the average is the only way really I think to look at us in this. As far as a Dutch tender or other means for acquiring stock, we've looked at them all. As you know, we did at Expedia, we did a successful tender, and we certainly look hard at it for IAC. We just did not think it would be effective. But we never rule it out. If there's ways for us given that we are forward net buyers of our stock, if there are ways for us to do it, to do it that are more efficient, God knows we talk about all of them; hopefully we will do them. Anthony Noto - Goldman Sachs: I'm not sure if you will answer this, but what were the reasons why you didn't think it would work IAC but it did for Expedia, the Dutch tender?

I don't think I actually can. Anthony Noto - Goldman Sachs: Thank you very much.

I am getting a big head-shaking here from the lawyer who, if I do something wrong, has a sword that he wields. Anthony Noto - Goldman Sachs: I completely understand. Thank you.

Your next question comes from Jeetil Patel - Deutsche Bank. Jeetil Patel - Deutsche Bank : Thank you, two questions. I guess, first of all, you've had some good success in your media business from a growth standpoint. Do you look at '07 and look placing increased emphasis here through your 23-6 initiative as well as other initiatives to grow this media side of the business? Is there an optimum mix of OIBDA that you want to kind of get from this category of Media and Advertising revenues over the long haul in this particular line? Second, if you look at HSN, do you think you're in a mode of acquiring customers to the channel or are you about reactivating customers that may not have been there in the past year? What's the opportunity to move these customers to online and reduce the distribution cost behind it?

First of all, that area is pretty high up without being able to put a flag at it or anything particular at it. As we said, we believe that this is a good time to develop original programming. By that, even though the Journal talked today about shorts, that's not our primary focus but we will do it within college humor and other things. But our primary focus really is not short films; it is original ideas. 23-7 is the definition of an original idea, which we will be going out with in a couple of months. We've got a lot more to come. We're going to make investment in this area in the next years. We think, given our background, our expertise so to speak historically in program matters, that we at least have a good shot, probably I would make my arguments good/better/best, but we have a good shot here and we are very disciplined. We understand how to institutionalize a program department. That's really where potential successes are going to come from. Original is the right way to go. I'm not saying we wouldn't buy anything, but I would much prefer to create something that is from an original idea and take it where it can go.

On HSN, I would say that business always needs to be in the mode of acquiring new customers, and that is definitely a key focus of the team. The ways you do that is by introducing new merchandise, particularly at lower price points, introducing new vendors so that you can attract people who typically come in for something new and something at a lower price point. That has been the background, particularly of the Sephora launch, and all the new products that you'll see coming out, so absolutely. In terms of moving those customers to online customers, Tom touched on some of that but I would say a couple of things. One is, through things like the HSN toolbar, which we put out in Q4 and then had some promotion around it that helps to activate online customers. But importantly, HSN.com needs to be able to attract new customers from the Internet as opposed to just people who are used to shopping on TV. We put a new CEO in place there recently who is bringing in a new team and have a whole host initiatives around really activating the customers online.

Next question, please.

Your next question comes from Paul Bieber - Piper Jaffray. Paul Bieber - Piper Jaffray : Two quick questions. First, can you comment on the strong margins in the Vacation, Personal and Discount segments? Then secondly, what does the new CEO in the Media and Advertising segment bring to the table that was missing before his appointment?

In the businesses you mentioned, Vacations and Personals have been great businesses for us really throughout the year. From a personal standpoint, the Q4 margin, I would encourage you to look at the full year margins. We moved marketing expense as we went into 2006 from the back half of the year to the front half of the year. This was planned; we called it out repeatedly on calls. So we saw some negative margin variances early in the year, expecting to get it back in the late year and that's exactly what happened. If you look at it on a full-year basis, the margins are still up and it's very solid, although the fourth quarter effect is a bit exaggerated because of the timing of some of those margin expenses. In Vacations, that just continues to be a business that has very good operating leverage. Obviously, the margins are high, both in absolute as well as increasing. I think, in that business, in Personals and I will also throw Ticketmaster into the loop or into the mix, we generally do not think of and go into a year thinking how we can grow margins. We try and figure out how we can grow revenues, knowing full well that the nature of the operating leverage in those businesses will continue to flow through. So that is really the story on the margin side.

On Peter Horan, the new CEO of Media and Advertising, his background I think bring some unique aspects to the table for us. One is his experience with content businesses, how to monetize them in new and innovative ways and make sure that you can drive traffic through different means than just advertising against them. At the same time, though, I would also say he brings more bandwidth, so the more great executives we can bring in, the more ideas that we can actually execute against. The good news, in this instance, though, is he wasn't brought in to fill a hole. We've got a great team of executives running those businesses; we always have. So we are able to have Peter in there as an additional complement in bringing some complementary skill sets but not to fill in any particular hole.

Thank you, next question, please.

Your next question comes from Mark Mahaney - Citigroup. Mark Mahaney - Citigroup : Thank you. I just wanted to ask a basic question about HSN growth. Perhaps you've turned the corner here; you've got slight revenue growth. What's a realistic expectation for when that's more in line with the overall growth of TV shopping? Should we exit '07 with reasonably consistent mid-single-digit revenue growth rates on things other than weak comps? What's the conviction level that we've done more than just turn the corner? Thank you.

I think that's fair. I think that we look for the year to increase the top line, certainly in line with the segment. I think that as we've said, the bottom line will follow but it won't follow probably in '07 in terms of such increases. But if we get the top line where we want it strategically, everything else will fall into place and then we will be on the right growth path for HSN. That's our goal for '07.

Your next question comes from Doug Anmuth - Lehman Brothers. Doug Anmuth - Lehman Brothers : Thank you. Barry, earlier in the year, you mentioned the timeline for the Ask deal, which suggests that it could be resolved in the next month. So I'm wondering if that timing still holds? If the answer is yes, as the search landscape stands now, do you have enough information at this point to be able to make a deal around Ask, or is it necessary to wait and see how Panama monetizes or whether MSN can improve its live search before moving ahead? Thank you.

Those are very good questions. I don't think I said a month but I certainly indicated sooner rather than later. Our desire, if we can and we don't know if we can. It may be that the best track for us is to see how Panama strengthens and that the gap between Google and Yahoo! narrows and that Microsoft makes some progress. But they are all interested in talking with us now, and some of them are putting things at us now that try to demand that we move the timetable up, at least demand that we consider doing so. Ideally, we'd like to, because we'd like to know who we're dancing with. I mean, we had a very good partnership with Google, they are the incumbent. It will take a lot but there are options and we want to play this sensibly. It's such a big opportunity for us. We now are 10% of Google's syndication business. We bring a lot of traffic; we bring a lot of queries. On Ask I'm going to just drop in here from '05 to '06 we increased searches from 1.1 billion to 1.75 billion. That's a lot of searches. That's a lot of ad possibilities going on. If somebody wants out there more share, more queries, or advertising revenue, we are pretty good clients. So we're not sure yet. It may be that just circumstances will make it so, that in the next month, month-and-a-half, I don't think it will be earlier than that, it could be two but I doubt it's longer than that, we will either say we've done it, here's what it is; we will both happily announce it, or we will say, you know what? We think it is better for us and we are going to shut this down, because we have that optionality ourselves, until we get a little later in the year. I can't predict it but it's very much alive and it very much for me, it's my senior priority. Doug Anmuth - Lehman Brothers : Can I just ask you a follow-up on that? How long would it take to do integration in terms of the back end, in terms of actually getting results with potentially a new provider?

In a millisecond, it's not an issue. Next question, please?

Your next question comes from Paul Keung - CIBC World Markets. Paul Keung - CIBC World Markets : Yes, a question on Lending, you mentioned that the close rates slid again in the fourth quarter, did they slip again into the first quarter? Can you handicap how long it will take to stabilize? What's your goal by year-end on the lending side? Can you remind me again what was the mix of traffic between direct network traffic and Ask.com?

Yes, I will take the lending one. I'm not commenting on first quarter close rates, but in Q4, as I mentioned, we'd definitely saw close rates continue to decline. The best indication of close rates is interest rates. Whether or not it is good for a consumer to refinance is basically what's going to drive closure and whether or not they can afford the house that they are looking to get into is whether or not close rate a going to go up or not. So right now, it is macroeconomics that is driving close rates down so far. What we're trying to do in '07 is to put real operations and real initiatives against close rates, which were the things that I talked about, which is making sure that we're much for diligent in the follow-up from a lead to a closing and that we stay in touch with that borrower all the way along the way. This has been a very challenging thing for LendingTree. It has been since the beginning. We've seen overall close rates move up, but particularly in purchase, we need to do a much better job.

55% of the revenue in the quarter was from proprietary traffic, about the balance, 45% from network.

Next question, please.

Your next question comes from Scott Devitt - Stifel Nicolaus. Scott Devitt - Stifel Nicolaus : With the Internet penetration of HSN now approaching 30%, I'm interested in the distribution fees that you pay for access to the television and whether those are impacted in any way as Internet penetration increases over time?

Scott, just one fact, the HSN Internet percentages are down in the low 20s; I think it's about 22%, 23%. I think the number you're looking at may be a combined HSN and Catalogs, both of which those Internet numbers are growing, but just to clarify those numbers. Our distribution deals, each one of them is a little bit different but in general, they've moved through the past several years to be fixed-rate deals. So we are paying, in essence, the number of subs that a particular cable or satellite provider is generating. So what's happened is you get kind of a fixed distribution cost. As sales grow, you are able to leverage that a little bit. We saw in the last several years leading into the latter part of last year and this year. Then you renegotiate those deals for longer-term rates and you start the process over again. So I think, as the business side of the web grows, I don't think it has a material effect one way or the other as it relates to that issue.

Your next question comes from Scott Kessler - Standard & Poor's. Scott Kessler - Standard & Poor's: Thanks a lot. You've already asked about Ask search partnership with Google. I'm wondering if you could articulate that criteria that you're looking at as the most important one, considering your options in terms of a renewal or new partnership? Maybe it's far-fetched but would you even consider trying to take that business in-house?

I'm not going to comment on any of the particulars of what is a very complicated negotiation. I just think it certainly is not in IAC's interest to do so. As far as doing it ourselves, we thought originally and we continue to do work in this area. We do do it ourselves; we do all sorts of ad products inside Ask.com for ourselves, for our own account. But as far as the ad network business, there are, as you know, three players in it currently. I think there probably won't be a fourth. At some point, I can't say what will happen out of the growth of advertising in this area, but right now, I would much, much, much prefer to rent it. I think that we will be well-served by that, certainly for a period of time. Scott Kessler - Standard & Poor's: Great, thanks a lot.

Your next question comes from Robert Peck - Bear Stearns. Robert Peck - Bear Stearns: Two quick questions, the first is more on HSN. Obviously pricing in the fourth quarter wasn't up as much as it was last year. Tom you referred to a couple of different items as to why. Is this more HSN-specific or do you see more industry trends changing on you? I'm wondering if you can comment just a little bit on the environment and competition to QVC there? Barry, this is more for you. It seems to come up periodically about any sort of combination of working with QVC. I know you can't probably talk about that directly but could you comment on the potential synergies and cost savings and whether something like that would ever make prudent financial sense?

Robert, on the first question, I think just one note on pricing, it's always a bit confusing with HSN because we never, ever raise a price on a particular item. Once the price is aired, if it's a re-order item, you're going to hold that price, maybe drop it, maybe make it a special. So the way you change pricing is by mix, both mix across classification and mix within classification and individual lines. As we look sometimes things are clearer in hindsight than they are at the time, but as we look over the last three or four years and you can map this and you can actually map us against QVC, our price points, which again are not us raising prices on items, mix has climbed. They've climbed steadily and were part of the reasons we had some good years there on the revenue. In hindsight, we think we did not have enough entry-level price points in various assortments to keep new customers coming in at the rate that feeds the pipeline that Doug was talking about. So you saw that in Q4, 2% sales growth is not our ambition, but we achieved that with much higher unit volume growth and price point declines. So we think that's directionally what you're going to see from us going forward, maybe not to the degree of magnitude in Q4, but directionally.

You know, I'm pretty forthcoming, sometimes more forthcoming than my colleagues like. So your last question, the last question I couldn't answer, relative to the inside strategy of it, and I promise you, as it relates to QVC and HSN and anything like that, that's the last thing I am ever going to talk about. Well, I shouldn't say ever going to talk about but I'm certainly not talking about it today. Next question, please.

Your next question comes from Heath Terry - Credit Suisse.

I was just wondering if you could talk just a little bit more about the specific strategies for HSN in terms of product mix or maybe just the end of the market that you are looking to move HSN into to try and close that gap with QVC and improve performance there. What specifically is going to change about the way they do business?

I think you're going to see a lot of different things. You are definitely going to see product mix changes; you're going to see much fresher products, you're going to see much more in the range of beauty and cosmetics. We're hoping to improve in the ready-to-wear category, continued focus in the mix of air time to our great chefs business and cooking. Then inside of classifications, inside of merchandise categories, what you're going to see, which Tom already alluded to, is more price points where we can bring in new customers, where we can then get them over time to buy more expensive things, much newer, fresher merchandise and less air time devoted to the so-called core vendors who we've had in the past. Part of that has already started to happen and that trend will just continue.

Next question, please.

Your next question comes from Kevin Kuzio - Dwight Asset Management. Kevin Kuzio - Dwight Asset Management: I saw in the release that the effective tax rate was about 39%; that kind of jumped up by some of the state taxes. I'm wondering if that's about what you expect for '07, and if it's reflective of the cash taxes that are paid or if there is some kind of screen out there to help reduce that cash tax burden? I'm also curious if there has been any change in the acquisition landscape, which sounded ho-hum back on the last call. Thank you.

Let me address taxes from the perspective of our A&I rate, which feeds the adjusted EPS. I think that is the non-GAAP measure that is what most of the people are focused on. If you look at our results in the quarter, it was actually 24%, so much lower than it has been and much lower than we'd expected to be on a future and ongoing basis. There were a variety of effects; I'm not going to go through them on this particular call. But there were just a variety of effects that were late in the year and then they get applied, per the rules, to the full-year rate. As we look forward into 2007, and there's always a million moving pieces, including composition of earnings, offshore versus domestically, et cetera, we think we have opportunities to be maybe a couple of points below where we've been historically which has been up in the 39% to 40% range. So some of the things we identified and were reflected in the Q4 results we think can have some future benefit. But it's still going to be a very full and robust rate, closer to the statutory rate than what we showed in Q4.

As far as acquisitions, there's certainly no change. We are engaged in lots of different kinds of discussions mostly a lot of them tuck-ins, which is what we very much prefer. But I would say the acquisitions range from $10 million, $20 million up to $200 million, $300 million individually. We are engaged in many of them. I would say certainly some will come through during this next year, but nothing of size and substance that we're thinking about at the moment.

Your last question comes from Robert Schiffman - Credit Suisse. Robert Schiffman - Credit Suisse : Thanks for squeezing me in. Just a couple of things on asset rationalization. Do you think you've built enough scale in any of your businesses that it would make sense to monetize them, either via a spin or merger with somebody else, Expedia-like? Secondly for Barry, I'd love to know if there's anything that, at this point, you are missing about running a traditional media company? There are still a lot of assets for sale. The valuations still remain low. Could you see yourself ever being back in that game? Thanks.

Yes. On the first question, I think as I mentioned in my script, if you look at the PRC transaction last year, we consider active capital management, which includes looking at all of the assets of the company, operating business and otherwise, that are not core and saying, what's the best course for them. So that's a continuing and ongoing effort. I think while not a goal, it's a likely outcome that if there's something that's non-core that we think is better turned to cash and then either redeployed in the business or it goes into the buyback kitty, whatever it may be, we think that's a prudent course. So I don't think there's a big demarcation here; I think that's part of our ongoing life.

We are honing down. We've been doing it for several years now into what we think is, when we say core, we really do mean core. Core to what we talked about before in terms of our strategies. They are very clear to us now. So it used to be that the box that what fit inside was a pretty large and undefined corner. Now, I think they are very defined. I think that's much better for us, the focus is just so much better. As far as prices are concerned of buying things, there's a lot to do but the valuations are, in most cases, the valuations are irrational. We will, when we see something where there's an opportunity cost to pay that is inside of our box, meaning inside of our strategies and a tuck-in or something that we want. By the way, in those, because of our leadership in so many of the areas we are engaged in, the prices for those things are actually rational. But my instinct is that we will tend to invest in things that tuck into our businesses, that are extensions of our businesses, and that are brand-new ideas. That's more than likely where we will put our capital. Again, something may come along, a moment in time, this and that, that you can't predict, but pretty much that's our acquisition – it could be elevated to the word 'philosophy' -- but there it is for what it is. Thank you all very much. It's nice to be with you again, quarterly. We will see you again next time. Meanwhile, everyone stay well and happy.

Thank you. Ladies and gentlemen, that will conclude today's teleconference. If you would like to listen to a replay of today's conference, you may dial in to 303-590-3000 or 1-800-405-2236 with access code 11082726. We thank you again for your participation. At this time, you may disconnect.