Barry Diller makes a deal for Care.com while trying to fix Expedia
Investors applauding IAC chairman Barry Diller today for being a man of action as the legendary media mogul made a move to acquire Care.com on Friday, one day after winging to Seattle to quell the fears of Expedia employees after removing CEO Mark Okerstrom and CFO Alan Pickerill
Shares of Care.com soared 13 percent on word of the deal. It's a dramatic rebound for the company and its stock. The stock was riding at an all-time high last March -- at $26 per share -- when a Wall Street Journal investigation questioned the online marketplace’s vetting process for its caregivers. By July the stock was down more than 50 percent and in August CEO Shelia Lirio Marcelo resigned and the future of the company in doubt.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CRCM | n.a. | n.a. | n.a. | n.a. |
| IAC | IAC INC. | 47.80 | +0.21 | +0.44% |
| MTCH | MATCH GROUP INC. | 32.22 | -0.06 | -0.19% |
| EXPE | EXPEDIA GROUP INC. | 128.30 | -0.43 | -0.33% |
On Thursday Diller was laser-focused on IAC's travel site, Expedia which has seen its stock drop nearly 18 percent in the last three months. Diller, who serves as Expedia Group chairman, and vice-chairman Peter Kern held a "fireside" conversation conducted by the president of Expedia Business Services, Ariane Gorin. During the talk, according to travel business site Skift, Diller announced to Expedia employees that he and Kern will be evaluating the company's needs before a new CEO and chief financial officer is appointed.
Diller and Kern will be handling day-to-day operations at Expedia until replacements have been hired. Skift reports that Experian had 24,500 employees at the end of 2018. But the trade site suggests the company may have fewer employees come January as the threat of layoffs loom over the company.
Expedia’s net income fell 22 percent in third quarter year over year to $409 million. Investing site, Guru Focus, recently wrote that Expedia is saddled with high operational costs compared to competitors rivals like Booking Holdings Inc., which owns kayak.com and priceline.com among others. Guru wrote that differential in personnel costs is eye-popping. In 2018, personnel costs as a percentage of revenue were 29.3 percent for Expedia, whereas they were just 14.1 percent for Booking.
SUN VALLEY, ID - JULY 12: Barry Diller, chairman of IAC/ActiveCorp and Expedia, Inc., speaks to reporters as he attends the annual Allen (Getty)
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As for his latest acquisition, Care.com, Diller stands to turn quite the profit, with the company staking a claim on the fragmented family care market and landing 375,000 paying families with the deal. But safety concerns pointed out by the Journal still linger around the company.
During an earnings call with analysts in May, Sheila Lirio Marcelo, Founder, Chairwoman and CEO of Care.com addressed the safety issue. "Our long-standing preliminary screening of individual caregivers already includes a search of a national criminal database and the National Sex Offender Public Website," said Lirio Marcelo, "Starting in the next few months, we will implement additional screening on caregivers looking to match with families through the platform with the improvements to be rolled out by the end of the year."