Aug. 21 (Bloomberg) -- After IAC/InterActiveCorp's breakup takes effect today, Chairman Barry Diller may find it as tough to boost five new stocks as it was one.

Diller, 66, is splitting up New York-based IAC to stem a 63 percent drop in the stock from the July 2003 peak. The Internet company will keep the Ask.com search engine and Match.com dating service, while spinning off HSN Inc. home-shopping, Ticketmaster Inc., time-share manager Interval Leisure Group Inc. and the mortgage-referral service Tree.com Inc.

The value of the companies ``should be much more than it is now,'' IAC Chief Financial Officer Tom McInerney said in an interview. ``I hope it's very obvious in a year. It shouldn't be a multiyear story.''

Shares of all five may fall in coming weeks, analyst Jeffrey Lindsay of Sanford C. Bernstein & Co. in New York said before trading began. HSN and Tree have to contend with the economy's drag on shopping and lending, and Ticketmaster faces new competition, he said. IAC and Interval may drop as investors who favor big companies sell out.

``You have to anticipate a fairly major shareholder turnover,'' Lindsay said. ``You also have a decline in the growth of online advertising that's being factored in.''

When IAC spun off the Expedia Inc. travel company in 2005, the shares declined 45 percent before rebounding. Lindsay predicts a smaller decline for the new stocks.

Market Value

The first day was better than expected, Lindsay said.

IAC gained 42 cents to $16.63 at 4:29 p.m. New York time from when-issued trading yesterday. Ticketmaster rose $1.45, or 6.7 percent, to $23.09. HSN climbed $2.68, or 21 percent, to $15.29. Interval jumped $1.76, or 12 percent, to $15.88, and Tree rose 4 cents to $7.46. All the stocks trade on the Nasdaq Stock Market.

``They're all well below their fair value, so people are tempted,'' Lindsay said in an interview after markets closed. He doesn't own any of the stocks and recommended holding the pre- spin IAC. ``They started very well, but the question is whether they can keep it up.''

The split ends Diller's bid to create an Internet company to rival EBay Inc. or Amazon.com Inc. He spent more than $14 billion on acquisitions from 2000 to 2005. The combined values of IAC and Expedia, at around $10.2 billion today, have declined $24 billion from their peak.

A 45 percent decline in IAC since the breakup was announced in November can be partly attributed to investors awaiting the outcome of the spinoffs, Eoin Ryan, vice president of investor relations, said in an interview.

Batting Average

Of the 12 companies bought for $200 million or more in that spree, only two, Miami-based Interval and the TripAdvisor travel-review part of Expedia, are worth what he paid for them, based on market values and write-offs. Diller will continue to lead IAC and be chairman of Ticketmaster. He will also own about 3 percent of each company, spokeswoman Leslie Cafferty said.

``It's certainly not the way you want to go out,'' said Justin Pettit, who leads the mergers practice at Booz & Co. in New York.

Analysts estimate the companies are worth more than their pre-spin prices, from Lindsay's $24 target price per old IAC share to the $31 estimate of Piper Jaffray & Co.'s Gene Munster

After today's trading, the new IAC is the most valuable company at $2.33 billion in market value, including $1.3 billion of cash. Ticketmaster is worth about $1.29 billion, HSN $852.4 million and Interval $885.3 million. Tree, based in Charlotte, North Carolina, is worth $67.1 million, or less than its $110 million cash reserve.

The values are based on projected shares outstanding supplied by Cafferty, and exclude stock options.

New IAC

The remaining IAC has the clearest path to longer-term success, Doug Anmuth, an analyst with Lehman Brothers Holdings Inc., said in an interview. IAC's Ask.com, the fourth-largest search engine, according to researcher ComScore Inc., is increasing profit because of a renegotiated advertising sales deal with Google Inc., the leader.

New IAC's profit before interest, taxes and non-cash costs should jump 57 percent next year to $195 million, Anmuth said.

IAC is also making a push in local advertising, McInerney said. CitySearch, which focuses on local entertainment, is profitable, and ServiceMagic, a referral site for home repair, boosted second-quarter profit 33 percent.

``The time for local is now,'' McInerney said. ``We've been building this for long time.''

`Significantly Worse'

HSN, based in St. Petersburg, Florida, is the stock the market undervalues the most, Anmuth said. The second-largest TV retailer behind QVC Inc., HSN has increased sales since hiring Chief Executive Mindy Grossman in 2006, while profit margins are a fraction of those at QVC, company reports show.

IAC has encouraged analysts to focus on HSN's cable channel, which boosted second-quarter profit 20 percent, while downplaying the Cornerstone clothing and home-goods catalog business, Lindsay said. He recommends holding IAC and doesn't own it. Including Cornerstone, profit fell 20 percent.

``HSN's problems are significantly worse than expected,'' Lindsay said.

Ticketmaster, in West Hollywood, California, faces competition from former customer Live Nation, the concert promoter now selling its own tickets, and is counting on the January acquisition of TicketsNow Inc. to close in on EBay's StubHub.com in consumer-to-consumer ticket sales.

Eric Baker, a StubHub co-founder who runs London ticket site Viagogo.com, said Ticketmaster has vowed to enter that business since 2002.

``Six years later they're nowhere,'' Baker said.

To contact the reporter on this story: Tim Mullaney in New York at tmullaney1@bloomberg.net.

Last Updated: August 21, 2008 16:48 EDT