The Purpose of Cash
In an interview with Advertising Age, Barry Diller has a few things of note to pass on - one of which is the “purpose of cash.”
The conversation;
Ad Age: The new slimmer, trimmer IAC has a lot of cash. What might you do with it?
Mr. Diller: [Laughs] Well, we’re comfortable keeping it. It doesn’t cry for spending. But classically, at least for us, cash is to be used to invest in our businesses, to acquire businesses and when we’re finished with those, then we repatriate it to our shareholders. That’s the purpose of cash. We want to keep good cash balances because we want to be ready for any opportunity. We’re essentially opportunistic.
IAC?
From a November 5th press release;
“IAC Announces Plan to Spin Off HSN, Ticketmaster, Interval and LendingTree as Four Publicly Traded Companies”
From their “Overview” page;
“Over 20 million times a day, IAC brands touch the lives of people around the world. More than 60 brands make up the IAC family, operated by approximately 20,000 employees in 28 countries. Our sole mission is to make daily life easier, more productive, more fulfilling and more fun for people all over the world. We’re proud to have so many great brands under one roof. After all, when it comes to all the possibilities the Internet holds, how could we possibly choose just one thing? From shopping to dating to home buying to travel and entertainment, we have it - the things people do everyday, being made better by the Internet. Each of our brands has its own unique culture and identity, and all of our established brands are industry leaders. We nurture the best practices, technology and talent of each and share them broadly to create value for our customers, shareholders, partners and employees - value that’s far greater than if each business operated alone.”
In the same interview Barry makes an interesting observation on Facebook and its valuation.
The conversation;
Ad Age: You in the past have had a pretty good grasp on speculation. What do you think of the valuations being thrown around about a site like Facebook?
Mr. Diller: Those are not valuations based on anything fundamental; those are valuations based upon rather enormous hopes and dreams. Not that they won’t necessarily come true, but at this point, that’s what they are in terms of revenue and profits getting to the level that would sustain a very high asset value. … The physics would demand that this becomes more rational at some point, I think maybe sooner rather than later. But again, that’s a prediction based on nothing but hot air, to mix many different metaphors.
So, the valuations are a bit irrational and will no doubt mature. Seems right but I wouldn’t question Barry’s experience anyway.
Tags: advertising-age, barry-diller, cash-money, lendingtree, publicly-traded-companies, ticketmasterRelated Stories
POSTED IN: Interviews, Online Money, Web News
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