Zacks_Analysts' Blog : Liberty Interactive Outperforms - Analyst Blog

Liberty Interactive Inc. (LINTA) reported solid financial results in the third quarter of 2011. Quarterly total revenue of $2,133 million was an improvement of 8.4% year over year, surpassing the Zacks Consensus Estimate of $2,110 million. Quarterly EPS came in at 16 cents, well above the Zacks Consensus Estimate of 14 cents.

Quarterly total operating income was $224 million compared with $220 million in the year-ago quarter. In the third quarter of 2011, consolidated adjusted OIBDA was $377 million compared with $373 million in the year-ago quarter. Quarterly earnings from continuing operations before income tax were $81 million compared with $36 million in the year-ago quarter.

During the first nine months of 2011, Liberty Interactive generated $516 million of cash compared with $1,070 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) in the reported period was $324 million compared with $894 million in the year-ago period.

At the end of the third quarter of 2011, Liberty Interactive had total consolidated cash and marketable securities of $1,918 million, down 22.1% year over year. Liberty Interactive exited third-quarter 2011 with $6,049 million of outstanding debt, down 6.4% year over year. At the end of the third quarter of 2011, the debt-to-capitalization ratio was 0.42 compared with 0.34 at the end of 2010.

QVC Segment

QVC revenue was $1,886 million, up 6.5% year over year. Adjusted OIBDA was $373 million, up 1.1% year over year. Operating income was $234 million, down 0.4% year over year. QVC domestic revenue inched up 2.5% year over year and QVC international revenue spiked 14.2% year over year.

eCommerce Segment

eCommerce Business revenue was $247 million, up 25% year over year. Quarterly adjusted OIBDA was $9 million, down 10% year over year. Operating loss was $2 million compared with a break-even in the prior-year quarter.

Recommendation

Liberty Interactive primarily competes with HSN Inc. (HSNI) and ValueVision Media Inc. (VVTV). We maintain our long-term Outperform recommendation on Liberty Media. Currently, the stock holds a short-term Zacks #1 Rank (Strong Buy).