Match Group Inc (MTCH) 2008 Q4 法說會逐字稿

Good morning, my name is Christie and I will be your conference operator today.

At this time, I would like to welcome everyone to the IAC earnings call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Now, I will turn the call over to Mr.

Tom McInerney, Executive Vice President and Chief Financial Officer.

Please go ahead, sir.

Thanks, operator and everyone, for joining us this morning for our fourth quarter earnings call.

Barry will make some brief remarks, after which I will come back to quickly tick through some housekeeping issues.

But first, I'll 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 believe, we anticipate or similar statements.

These forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today.

Some of these risks have been set forth in our Q4 2008 press release and our periodic reports filed with the SEC.

We'll also discuss certain non-GAAP measures, and I refer you to our press release and the Investor Relations section of our web site for all comparable GAAP measures and full reconciliations.

With that, I'll turn it over to Barry.

Thank you, Tom.

Good morning, everybody.

We're going to follow our, I guess it is our second time, maybe third in terms of trying to get to questions as quickly as possible and not make long-winded speeches.

With lots of this versus that, et cetera, figures.

I've got only a couple of things to say.

First, on our cash, I know cash is, should be, certainly with this Company, where 80% of our value is in the cash.

So, it is more than an appropriate topic of interest, concern, whatever, opportunity.

First, I don't think it is exactly gathering cobwebs yet.

We've made a few small acquisitions in the single and low teens of millions.

All of these are to further extend our current businesses.

And we have probably four, five, six different transactions in various stages, that if we get them all which I doubt we would do, it would total maybe $100 million.

Now, the truth is that nothing is the news on cash other than to say, again, that I can't imagine that we're going to spend anywhere near half our capital on in-line acquisitions, and that barring anything transformational, that, of course I can't predict, we'll repatriate cash to the shareholders.

But there's no timeline to this, and we feel no anxiety to begin this process before certainly the next months tell us what unknown opportunities might present themselves.

Right now, I would say that I would look to the latter half of the year for us doing anything specific in regard to repatriating the cash.

On Ask, and Tom is going to talk a bit about Ask, and I think he's going to talk a bit about first quarter trends.

Yes, that's correct.

I feel that most of the issues, not everything but, has been self-inflicted, not out of mistakes but out of aspirations for getting Ask to have real and consistent growth.

And for real and consistent growth, we're going to have to wait a couple of more quarters.

And it is of course speculative.

Our problems have been both in the speed of the service and in less than great results.

And that, in spite of the large increases that we got in queries from large marketing efforts, they failed to retain users and they failed to increase frequency of use.

And this was the pattern of last year.

In October, we launched a new product, which was a great improvement in speed and in getting to the right answers.

But the initial consequence, that's where I say self-inflicted, was we got less queries because we were making the product more efficient.

However, the testing in the fourth quarter showed us that retention and frequency were rising, which is what we had hoped.

That was our theory.

That, together with spending very little marketing money in the fourth quarter, led to the declines.

Now, as to the future, we've changed our tactics on marketing.

We're now going after verticals, vertical sites that give us both traffic and give users then a taste of a better experience so that they'll come back.

Our dictionary.com purchase last year was an example of that.

It really taught us that that was an excellent way to grow.

We just announced our deal with NASCAR, which has this wildly dedicated audience of 75 million, and we're going to back it with a very focused marketing campaign over the next three months.

Then we're going to add between 8 to 10 other verticals as the year rolls out.

That's the strategy for Ask.

If we're right, we'll see query growth begin to increase significantly by the beginning, by probably the middle of the year.

Now, I invite of course all questions about this, and I just wanted to give a slight overview to the Ask question and the cash question because I know it's certainly top most on everyone's mind.

So, with that, Tom, you want to -- .

Yes, let me just marry that with some insight into current trends as we see them and highlight some material items specific to Q1 that will impact results.

In the media and advertising segment, which includes our search businesses of course, for the first quarter, we expect revenue to decline in the low to mid 20% range year over year.

The anticipated revenue decline is due to a variety of factors, both at Ask and in our Toolbar business that range from the purely external economic issues to the elective decisions we made in the product and marketing area that we feel will best drive long-term growth but are hurting us in the short term to a difficult environment.

This is what Barry just alluded to.

While a complicated confluence of factors, the headline is that during the fourth quarter, we saw increasingly negative volume and monetization trends, and in January, these trends largely continued.

Most of this revenue decline will fall through to the bottom line due to the naturally high operating leverage in the search business, as well as in anticipated and strategic increase in marketing at Ask associated with the NASCAR partnership.

So, we'll see little to no profits in this segment in Q1.

We'll discuss current dynamics and plans here more fully in Q&A, as it is probably a more fluid and effective way to discuss the topic than a long scripted recitation of metrics and plans.

Beyond media and advertising, Match continues to perform well.

We see no discernible impact from the economy.

ServiceMagic is still growing revenue at a double digit rate, while Q4 year on year OIBA trends continue at flattish to last year as we invest in our International business.

In an emerging businesses, in recent months, we've taken action to rationalize our efforts here.

Selling to third parties or otherwise folding certain efforts into other of our operations, and reducing costs.

In 2008, emerging businesses negatively impacted OIBA by $35 million, and in 2009, we expect this number to be reduced to approximately half of that.

Although there is a degree of seasonality in this with Q1 being a more than proportional amount of this.

Only InstantAction, our significant effort in online gaming and the very successful, the Daily Beast, are efforts now requiring material investment, and other businesses including Pronto, are generating profits.

While we remain open to opportunity always, we expect to remain focused and do not expect to widen our scope here going forward.

With respect to taxes, I mentioned last quarter that we would expect cash flow in 2009 to exceed OIBA due to some tax benefits related to the EPI sale and certain other items.

This remains the case.

These items will offset any taxes owed on the Shop proceeds, which are already reflected in the year-end balance sheet, and we should be roughly net positive another $75 million in cash taxes over the course of the year.

Note, this receivable is reflected in the year end balance sheet and is expected to be realized in Q4.

With that, operator, let's get to questions.

(Operator Instructions).

Our first question comes from Jennifer Watson with Goldman Sachs.

Your line is open.

Great.

Thank you for taking my question.

Can you talk a little bit about the cost of the NASCAR marketing campaign and why that campaign, you think, will be better served, end targeted than the campaigns that Ask has run in the past?

Sure.

Well, first of all, I don't think we're going to disclose the costs for NASCAR.

Though I would tell you that the marketing plan for the first quarter, which includes all of the NASCAR costs, in their total which includes costs -- I think it does, Tom, doesn't it?

Yes.

It is a material percentage.

But we will, because it is a year-long range, (inaudible) over the course of the year.

It is not, and as you all know in the world of sponsorship, all sponsorships probably have come down.

It is not, in the scheme of things, an expensive proposition.

And the reason that we are doing this rather than having a marketing campaign that essentially says we're better than Google is the real change in our tactics.

This is an audience of 75 million, NASCAR.

What we're doing is designing a NASCAR search site that will knock the socks off anybody who has any interest at all in NASCAR, and these people are tremendously interested in every detail.

And that, essentially that vertical search site, we think is going to generate traffic to us that we also think, because we think the experience based upon all of our testing, the experience is a positive one, that that will increase our queries in a targeted way.

And this is what we're doing in terms of the -- really, the strategy for Ask is to vertical by vertical, to not go frontally against the larger player, Google.

But, in fact, to go for audiences that will come to us because the search results we deliver are manifestly better than anybody else could deliver because of the structured content we're able to put in it.

That's our strategy.

Great, thank you.

Your next question comes from Ross Sandler with RBC Capital Markets.

Your line is open.

Hey, guys, thanks for taking the question.

Just wondering if you can get a little bit more granular on the 1Q trends you're seeing in media and advertising.

So, if we assume kind of a similar decline for the network side, I would get something kind of like a down 10 to 15ish year over year for the proprietary revenue.

Can you just talk a little bit about the difference between query and pricing trends, revenue per query trends, and then maybe also the differences you're seeing between Ask.com and Fun Web within media and advertising.

And I've got one follow-up.

Thanks.

Sure.

Ross, a lot in there.

Let me make a couple of comments.

One is, that the trends we saw, which we -- you'll remember sitting literally a year ago.

We told you this was going to happen over the course of '08, where the network business declined on a revenue side as a percentage of the total.

You saw that each and every quarter, tracking through was largely as a result of changes we made and businesses we emphasized and de-emphasized as a result of the Google arrangement.

In Q1, we'll still see a little bit of that effect because we had a little bit of that business in Q1 '08, but really after Q1, it will start to mitigate.

So, I don't think you're going to see these dramatic differences in growth rates between network and proprietary going forward, although you know, all of these businesses are very dynamic.

So, we'll see.

In general, what we've seen kind of trendwise in really both of these businesses aside from that fact is that CPC performance weakened really over the course of Q4 and into January.

So, for Q4, we may have seen Ross CPCs to us kind of absent other effects, changes to the product, our deal, et cetera, of kind of down low single digits and changes in coverage were able to offset that.

So, kind of on a pure revenue per query basis, we were probably up in the low single digits, again, absent changes we made to the product or the deal, et cetera.

And in the first quarter of this year, we were probably down high single digits, low double digits in that regard.

It has been a marked deterioration in that environment, and then you couple that with some of the changes Barry alluded to in terms of the product, which impacts both raw queries as well as the monetization of those queries, and you get that kind of composite revenue effect I mentioned.

And I think you asked about Ask versus Fun Web.

I think in general, everything I've said applies to both, economic impact, et cetera.

I think there's some different business specific issues at Mind Spark in terms of the Toolbar business and pressure on CPA marketing and stuff.

But in general, those trends are the same across both businesses.

Okay, great.

And then the margin on the media and advertising side.

We're running kind of 19%, 20% middle of '08, and it ticked down to 15% in the fourth quarter.

What do you guys think is the way to think about long-term margins within media and advertising?

Somewhere between the 15% to 20% range or should we revert back to, closer to the 20%, where we were for most of 2008?

You know, Ross, I think it is really honestly impossible to answer in this environment and at this moment in time.

I would say this.

We have learned how, through the use of technology and a variety of other things, how to operate the business without massive investment via capital or people or anything like that, in the business.

So, there is no reason from kind of a structural perspective, the business shouldn't have the types of margins it once had, which were, as you alluded to, were up in the 20% range.

Clearly though, that depends on getting volume growth going in the right direction and getting at least a benign, if not favorable pricing environment, and we don't have either of those right now.

Given both of those, which are obviously a big to do, and some of which is out of our hands, some of which is not, the margin characteristics of the business remain intact.

If our strategy works, and queries go up.

And the environment improves.

The environment is going to improve.

The question is only when.

If our strategy works and queries go up, we're going to have fine margins.

It is a business where, of course, like all of these Internet businesses, where scale is the tale.

Next question, please.

Our next question comes from the line of Jeetil Patel from Deutsche Bank.

Your line is open.

Hey, guys, a couple of questions.

First of all, I guess the changes you made in October on the Ask interface, it had an impact on queries and frequency.

Is there any way you can quantify what type of improvement you're seeing?

Is it on the order of let's say 0% to 10%, or 10% or greater in terms of the uptick as it relates to general queries and kind of loyalty.

Second, I guess when you look at the verticals out there that you're targeting, this segmented modeling strategy, any sort of flavors we should be thinking about in terms of verticals or demographics that you're looking to address?

And then I have a quick follow-up.

Jeetil, first on the product impact.

You know, we measured, it's obviously a moving target but when we tested the new product before it launched and we continue to test it against a limited deploy of people using the old product, the revenue per -- the revenue difference, let me answer it that way, on the new product versus the old was initially as wide as about 15%, 16%.

And that's because people are finding what they're looking for in the algorithmic results quicker, they're not clicking through to the sponsored links, they're not having to surf around as much.

Obviously, we think that's a great thing for the consumer experience, and our testing shows that really over the course of this year and as Barry said, probably by the second half of this year, we will earn that back because we'll start to see and we've started to see, but it is earliest days, kind of frequency and retention.

If you think of that 15%, 16% negative effect evening out to kind of flat just on the old product versus the new over the course of roughly three quarters, you get a sense of how much better it is on the frequency and retention side.

On the verticals, I'll kick it off and then Barry may want to add to it.

But the focus, we aren't going to discuss specifics today but the focus is to look at big areas where there is a lot of audience, a lot of passionate audience, like NASCAR.

That's not a small audience.

Where we can really differentiate on the product side.

So, it is not so much a demographic play as where can we do a compellingly better job than the competition by integrating structured data, Q&A data, Ask natural technologies and where we have ideas to market it.

Because, obviously you have to go out and tell people about it.

Lifestyle.

And rather than, so to speak, demographics where there are large audiences.

Health is certainly an area of a vertical that we're going to attack on a vertical basis.

We've got, actually we've got many more than the eight to ten we've identified.

We think that this is an area that is not particularly limited.

And that's what we're going to pursue.

Just a follow-up.

I know the environment's pretty challenging right now, and seems like more the norm now, is to find 5%, 10%, 15%, kind of bodies or costs out there in the model to take out.

I guess, have you guys looked at the cost structure of the business in light of the economic environment, kind of the business at hand, and are there opportunities to maybe shed some headcount in different business areas or just take down costs by about 5% to 10% across the board.

Well, Jeetil, there is always that opportunity.

Obviously we're looking at that constantly.

I think we have not yet taken the type of action, not to take you too literally, but that I think you're alluding to, which is one of these across the board big swags.

Going into this year, with the environment being what it was, we just quite frankly did not think it was the right thing to do because we thought it was counter to our own interests, given the resources we have and given our long-term aspiration.

Obviously, we've done some things.

We've done, I'll say some of the normal things.

We have a hiring freeze.

We have a -- no salary increase freeze.

We've combined some of our smaller operations.

I alluded to that in the emerging business rationalization.

So, we're attacking it so far on a case by case other than those kind of across the board freezes, but in terms of outright reduction, a case by case business where we don't think, you know, investing is the right thing to do.

Obviously, this is fluid.

This is dynamic.

We'll evaluate it over the course of the year.

And the minute we stop believing in the long-term growth of the business, we'll look at it much more aggressively.

That's the right way to think of it.

We don't have -- some companies have extreme short-term issues.

We have no short-term issues.

Our issues are, is the strategy right in both our search business, our local business and in the one or two other things that we're pursuing, certainly our Match business, personals business, but is the strategy right?

In this period, the purpose for us is to make that strategy during times when other people may have short term issues, but make that strategy come whole in the most moment we can bring to it.

That does not mean we want to also, or we're not mindful that we should not be splurging money around, and we, I think have taken the proper actions now to deal with that.

But that's really what we're going to do, what we're going to do unless, of course, conditions completely change.

But as much as I can say that I don't think we're having any turnaround in the economy soon, I don't think it is going to affect us in that regard.

Thank you.

Our next question comes from the line of Mark Mahaney from Citi.

Your line is open.

Thank you very much, two questions please, Barry.

In terms of M&A priorities, you've talked generally in the past about being interested in the local and the search advertising place sectors.

Is that largely -- would that largely continue to be the focus of M&A priorities?

Then, Tom, you made a comment about search seeing high single digit, low double digit declines in Q1 so far.

Could you just clarify, were you referring to CPCs or RPS with that statement or both?

Thank you.

Yes, you're correct.

The areas for us in acquisitions are to extend our own businesses, and the primary areas are search and local.

Mark, on your second question, that high single to low double digit was a reference specifically to CPCs, what we call RPQs or others call RPS is wider than that in the Ask business, which is roughly half our search volume because of the aforementioned product changes.

So, kind of high single, low double digit would be just environmental.

Then the product changes we've made, add maybe double that.

In the other half of our search business, which is the Fun Web products business, or as I referred to it earlier, Mind Spark which is internal nomenclature we use, that is, RPS is roughly equivalent to CPC because we don't have those comparable product changes which are adding to the decline.

Thank you, Tom.

Thank you, Barry.

Next question, please.

Our next question comes from Doug Anmuth from Barclays Capital.

Your line is open.

Thanks for taking my questions.

First one is also on Ask.

I was hoping you could provide some details on the length of the Symantec deal that you announced this morning, and also on its economics.

In particular, are there any up-front costs involved or is it more a rev share as the Toolbars generate searches for Ask.

How should we think about the costs here relative to the NASCAR deal, then I have a follow-up as well.

Let me take the NASCAR one first.

We're not going to discuss the specifics, but I think as Barry alluded to, our Q1, do it this way, our Q1 marketing plan for Ask is, a couple to few million more than Q1 was a year ago.

And last year was not a big advertising year at Ask to begin with.

And while the marketing plan for Ask for the full year is not set, the '08 figures were probably less than half they were in '07.

And by virtue of the NASCAR arrangement or anything else, where, not locked into anything close to the '07 figures.

So, we have a lot of flexibility between where we were last year and where we were the prior year, which is a big $50 million difference, to see what happens in Q1, see how the test goes, see how volume trends and adjust accordingly.

This is not a big locked in amount that's going to be dragging on our P&L all year.

Unless we electively decide to spend more behind it and we'll keep you posted on that.

On the Symantec length, let me check on that because I don't know the answer to that one off the top of my head.

The economic arrangement, I think one of your questions was the economics on that.

It is a pure rev share.

So, again, there's no--.

No commitment.

There's no commitment other than as we earn revenues, we give them a portion.

You had a follow-up?

Follow-up, Barry, just curious if you have any thoughts or insight into Liberty selling its shares.

None.

Thank you.

Next question, please.

Our next question comes from Justin Post with Merrill Lynch.

Your line is open.

Thanks.

First, I would like to start with the Match margins.

It looks like subscribers increased but in the release, you said that you've cut marketing.

Is that a temporary thing?

Are you seeing some efficiencies in that business?

I think it is largely timing and temporary.

You know, the marketing mix is a worldwide mix across multiple geographies, 70% domestic, 30% International.

And the full gamut of off-line to online, and we've said, I think long periods of time that we did not view Match as a real margin expansion opportunity.

Over the last couple of years, I've been proven wrong on that.

We have gotten some margin, so I guess I'll say tactically, we're going to always look to optimize that marketing mix but strategically, I wouldn't think there is a lot of margin opportunity long-term from doing so.

Last year it looks like OIBA was around 25%.

Is that where you think a good long-term number is?

Can you comment on that at all?

Again, I think we're not looking at it as a margin expansion.

We're certainly not going into this year or beyond looking for it to decline.

It will play out as it plays out.

The business is off to a good start.

It has been, I think probably the one truly recession-proof, knock wood, so far, business we have.

And we'll see what the year brings.

Okay.

Then on the cash, given it is such a meaningful portion of the stock value, how do you plan to invest that?

What kind of returns are you targeting this year for that balance?

Very conservatively and low, respectively.

We've opted for prudence over anything else here.

So, 99% of the cash is in either government money market funds or with banks that are half a dozen names you would completely approve of.

And there is only a couple of minor exceptions to that for tax reasons and some various other things.

And we're going to continue to do that.

We're getting the kind of rates you would expect from that strategy, which is a point or less or whatever it may be.

And we're going to continue to be very prudent there.

Last one.

Maybe you can help us with the book tax rate, and then it looks like you're going to be paying less cash taxes than the book tax rate.

What balance sheet account should be getting the benefit of not paying those taxes?

Longer term, the book tax rate on the adjusted EPS side is still going to be up in the high 30s, all of the factors that have gone into that we've talked about before, remain the case.

We had a better rate than that this quarter because we were able to utilize some foreign tax credits, and we'll continue to look for those opportunities.

But I think long-term, it will be in the high 30s.

The cash, the positive inflows we expect from taxes over the course of this year will come out of the current asset side on the income tax receivable line.

Great.

Thank you.

I did get an answer to the earlier question, the Symantec deal is two years.

Next question please.

Our next question comes from Jeffrey Lindsay with Sanford Bernstein.

Your line is open.

Thank you.

Can I ask you a couple of questions, is the de-emphasis of partnerships process in Ask.com, that drove down the revenues.

Is that process still ongoing or should we think of it now as being finished?

And then could you give us indication, just what percentage of Ask.com's revenues are from overseas and might be subject to the same currency effects as the Match.com revenues.

Then I had one follow-on.

The distribution, distribution is a funny word because it gets used by us and others in a variety of different contexts.

But the lines -- the references you're pulling out from the release and our remarks, there was one specific activity we were engaged in where we were distributing Google-sponsored listings.

Kind of outside of the Ask product, if you will.

And when we renewed that deal, effective 1-1-08, we basically got out of that business with a couple of small exceptions.

The deal was effective 1-1-08 but we still had material revenues from it in Q1 '08.

So I think this is the last quarter that we're currently in that you'll see a negative variance from that, and then that effect will essentially be gone.

I'm sorry, your second question?

Does Ask.com have significant overseas revenues and would they be subject to the same currency headwinds if you will that Match.com saw.

Significant, it is a minority of their business, primarily in the UK.

So, FX is a factor, but relative to the revenue changes either for Q4 or Q1 we've been talking about, it is not a large factor.

I had one follow on.

We just wanted to ask, basically would your success in the free dating website, Down to Earth, would that potentially be cannibalistic for Match.com revenues?

We don't think so.

It is a bit of an experiment.

We launched it in beta form, and Match's sweet spot, obviously it appeals to a broad cross section of demographics but it's sweet spot is late 20s and older, and this site is really targeted at kind of late teens, early 20s, people that don't have the money generally to pay for a subscription site.

We refer to it kind of as the on-ramp to dating.

It is an experiment.

It will be ad supported.

You could call it kind of overnight dating.

We'll see how it goes.

It is very early stage and really targeted at a different piece of the market.

Thank you.

Next question, please.

Our next question comes from Imran Khan with JPMorgan.

Your line is open.

Hi, this is Bridget Weishaar in for Imran.

We have two questions.

One is, can you just discuss in general what you're seeing in terms of advertiser spend trends and the timing of the spend?

And second, if you could discuss your acquisition of Sendori and how it fits with your overall strategy, and if you could give us any idea of historical revenues there.

On the advertiser spend trends, I mean as I alluded to earlier, this raw CPCs kind of absent our own effects, are down, call it 8 to12.

I said high single, low double.

So call it maybe 8% to 12% in January.

Which is lower and worse than it was in Q4.

But we'll see.

This historically has proven to be very dynamic.

People can adjust these spending patterns through search, multiple times per day.

Some of our businesses adjust their spend.

So, it is hard to talk about trends other than what you see at the moment.

We've not talked about, and I'll also add that on the display side, it is probably more challenged which is not a surprise given the nature of display relative to surge.

In January it got off to a very slow start.

Almost up to 50% down.

Now, it is a small percentage of our overall business.

But again, I think kind of indicative of the broader environment.

Sendori, very low revenues, kind of not material to IAC historically, but a business we bought for a small amount of money just to extend our Ask sponsored listings business.

Which has been quite successful off of a small base.

Operating an ad network, akin to Google sponsored listings network.

Just much smaller.

They have a very interesting product and strategy to monetize directly traffic off of domain parks.

We think it will be a great source of network traffic and ad budget for Ask sponsored listing business, which continues to grow very nicely and very profitably.

Great, thanks.

Next question, please.

Our next question comes from Scott Kessler with Standard & Poor's.

Your line is open.

Thanks a lot.

Barry, you referenced the notion of repatriating some of your capital, potentially in the second half of this year.

Can you be more specific in terms of what are you meaning, are you talking about repurchases, are you talking about potential dividends, whether a recurring one, a special one?

What did you have in mind, thanks.

The truth is, we have all of it in mind.

I would think, and again, just think, that the weight would probably be on repurchases but it may not be.

We really will look at all of it and see what's the best instrument for the utilization of the cash for the shareholder's benefit.

And so I can't be more specific than that.

That's fair.

Thanks.

You're welcome.

Next question, please.

(Operator Instructions).

Our next question comes from Alan Gould with Natixis.

Your line is open.

Thank you, first, a couple operational questions then one follow-up on the cash.

Operationally, is the fourth quarter OIBDA a good run rate for '09?

No, I mean if you --.

Corporate OIBDA.

Oh, I'm sorry, corporate expense, I thought you meant consolidated.

Corporate, I'm sorry.

Close.

We had a couple million dollars of items that were in accessed reserve reversals in the clean-up at year end.

But I think we're on track for kind of a 68ish for the full year, and I think that would imply a quarterly that's slightly above where we were in Q4, but we've gotten those expenses down from this, from the spin-off.

We're watching them pretty closely.

Tom, I know it is early but with the 1Q media OIBA break even versus $37 million last year, is it fair to assume the full year media will be down at least 25%?

I think it is too early.

I think, as we said, there's the external environment is a big unknown.

We swung from plus 5 on the, kind of absent our own effects RPS or RPQ from, in late in Q4 to minus 8 to 12 in a matter of a few weeks.

That type of activity, and that's just one piece of it, but that's, in a sense, raw profit depending on what you do on the cost side in reaction to it.

So, I think we're certainly looking.

Barry alluded to the actions we're taking with an eye towards resuming growth and in terms of the things we control in the second half.

And I think that will play out the way it plays out.

Obviously, if that happens, the real question will be run rate as opposed to what it adds up to for the year.

But it is really premature.

Barry, given, as you said, cash is 80% of your value and your comments that barring a transformational acquisition, which I don't think you've used that terminology before, how married are you to search and related, and would you look back at your old media businesses again given how low those valuations have become?

No.

I don't think so.

It's unlikely.

I think all of so to speak, new media has its challenges, too.

But I think old media, particularly the distribution side of it, is very challenged and has nothing to do with macroeconomics.

It has to do with technology.

I don't really have any interest in that.

Okay, thank you.

You're welcome.

Next question, I think we'll do one more question.

Okay, good.

Our last question comes from the line of Jeff Rath with Canaccord Adams.

Your line is open.

Mr.

Rath?

Can you hear me?

Yes, we can.

Great.

There is a bit of a debate there around the economic sensitivity of sort of local advertising, local search, if you will, in an economic downturn.

I mean you've given us a lot of granularity, sort of on a divisional basis.

But can you talk a little bit I guess on your city search business?

How is that performing in this difficult time?

Is it underperforming, is it proving to be more economically sensitive?

Any color there?

I have a follow-up.

Yes, good question, Jeff.

It's certainly softened a bit in Q4 and into Q1.

Not to the degree we've seen on the search side.

And I think it is an unknown.

No one has obviously been through anything like this, particularly in a web era.

So, it is unknown at this point whether it, in fact, is less recession-prone or impacted than on some of the other types of advertising or is it just a slower lag.

It makes sense that it is a slower lag to a degree.

Because you have small business, I mean compare the search marketing where people are adjusting pricing four times a day, to a local business operator who maybe once a month or something like that, is thinking about what he's doing on the marketing side.

So, there is a clearly a lag there but I would say kind of Q4, Q1, flat to down slightly.

But it has softened, so --

If you took current, you would say it is actually the strongest sector.

If you took it just up until (inaudible) as Tom says, there may be a lag there but certainly as it relates to display advertising, which has been really affected by this.

I do not see it certainly changing any time soon, and probably search is down anywhere from 7% or 8% to 15%.

I think that's kind of holding.

So, it is for the moment, a local side of it is better than anything else.

Great.

Just a follow-up if I could.

Just to attack the search question, the broader search question a different way.

Again, you provided us lots of color there.

It seems though that if I could color it a little bit, it seems like you saw a weakness kind of mid fourth quarter and then overall CPC trends seem to stabilize a little bit.

And now we've seen a pretty material decline say since early in the year until now.

Is that a good way to think about the overall CPC trends, excluding the company specific initiatives that you're currently undertaking?

Jeff, I would have to go back and look at Q4 in terms of -- I didn't look week by week in terms of where it hit.

I know it got weaker late in the quarter.

I can't speak to mid versus late or whatever.

I also know it got materially weaker on the CPC side in January.

And that is perhaps not a surprise, right?

I mean in tough times, the last time you cut is in your peak period.

And Q4 still has seasonality for a lot of web spenders and then you come back from the year and everybody says let's see how this plays out.

And so January has been the most, more pronounced effect.

Great.

That's it.

Thanks very much.

Thank you, all.

Thanks for spending some time with us.

This is a, separate and aside from economic world, the depressing economic world that we live under, it is a bit of a wait and see for the operating businesses of this Company, the strategies that we have are clear.

They haven't come through yet.

The indications are good but they're not determinative.

So, I think we'll probably have a good deal more information on our next call, and I think we'll have fairly conclusive on the call after that about certainly the strategy in Ask and how it is working.

Other than that, thank you and have a good day.

This concludes our conference call for today.

You may now disconnect your lines.