UPDATE 3-Diller eyes deal making with possible Ask.com sale
* Q3 EPS $0.16 vs Wall St view $0.13
* Q3 rev down 9 pct due to weaker ad sales
* Shares up 1 percent.
* Open to consolidation in search business (Adds analyst comments, CEO comments, new first sentence)
NEW YORK, Oct 27 (Reuters) - Barry Diller may be about to hang a 'for sale' on Ask.com, saying on Tuesday that his search advertising business could be open to a takeover given the competition it faces from Google Inc and Yahoo Inc.
Diller, known for his dealmaking in the media business, made the comments in a conference call to discuss quarterly earnings at IAC/InterActiveCorp (IACI.O), which owns Ask.com, dating site Match.com, and CitySearch.
"We've been asked a lot whether we're open to consolidating transactions in the area of search. The answer is yes," Diller said. "And, it is unlikely that we would be the consolidator."
While Diller cautioned "you cannot really make any absolutes" about deals, he acknowledged that Ask.com faced a challenging environment in a search business.
Ask.com is a distant fourth behind Google (GOOG.O), Yahoo (YHOO.O), and Microsoft (MSFT.O) in Web search, holding just 4 percent of the market, according to comScore. Most of its revenue is generated through an advertising relationship with Google.
Diller has been disappointed that Ask has been unable to grow its market share since it was bought in 2005, according to a person familiar with the company's strategy.
For the third quarter, revenue at its IAC's media and advertising business, which is dominated by its Ask.com business, declined 11 percent.
Overall, parent company IAC also reported lower revenue, down 9 percent from a year ago, but sales and profit were nonetheless stronger than forecast, sending its shares up 1 percent in mid-day trade. Shares initially jumped 5 percent.
Credit Suisse analyst John Blackledge said in a note that IAC's operating profits were "well ahead of our expectations."
IAC's quarter was boosted by the sale of shares in OpenTable Inc and the sale of its Match Europe unit, which helped lift earnings to $21.7 million, or 16 cents a share. Analysts had expected profit of 13 cents a share, according to Thomson Reuters I/B/E/S.
It posted a loss of $14.8 million, or 11 cents a share, a year earlier. Continued...
