best-known US online lending exchanges, has reported a huge loss of
$536.4 million for fiscal year 2007 – another high-profile casualty
of the ailing mortgage market in the US.
Revenue in the fourth quarter fell by 55 percent to $52.1 million
compared with $115.4 million in the previous year (see
table), primarily due to fewer loans sold and lower revenue
per loan sold; revenue from all home loan products declined, with
home equity declining the most quickly. A profit of $7.3 million in
the fourth quarter of 2006 swung to a loss of $508.1 million in the
same quarter of 2007.
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The fourth quarter of 2007 loan loss provision reflects the
increased losses the company is experiencing with respect to
previously sold loans. Profits were also impacted on by higher
costs per loan sold resulting from lower close rates and stricter
underwriting criteria, partially offset by lower marketing
expenses.
The operating loss includes a $475.7 million impairment charge
related to goodwill and intangible assets.
IAC/InterActiveCorp (IAC), LendingTree’s parent group, had
announced last November plans to divide its various internet
businesses (which include the search engine Ask.com, Ticketmaster,
the largest ticket seller in the US, and The Home Shopping Network)
into five separately quoted companies in an effort to boost
shareholder value.
“There is good news and bad news this quarter, the mix of which is
another reason why our previously announced plans to reorganise IAC
into five independent public companies makes more and more sense,”
said Barry Diller, IAC’s CEO, in a statement.
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By GlobalDataAccording to LendingTree, it has facilitated more than 23 million
loan requests and $185 billion in closed loan transactions since it
was established in 1998. “One thing about LendingTree, this is a
true moment in time. It is a cyclical business; we knew it when we
bought it. We bought it for its brand, and I guarantee you one
thing, the brand is solid,” added Diller.
Plans for the spin-off are, however, on hold, pending resolution of
a court action brought against IAC by Liberty Media, which holds a
30 percent stake in IAC and opposes any outcome that would dilute
the voting power attached to its shares.
