I think we're hopefully near the bottom as a result of both of these, but at the same time we're not seeing signs of life in, certainly, the credit markets. We're seeing, if anything, mortgage products going away from the market, not coming back into the market. On the real estate side, I guess the one encouraging indicator that we are starting to see is pick-up in transaction volumes in some key markets. But at the same time, a lot of those sales are so-called short sales where people are selling the home for less than their mortgage. It's good to see that sellers and buyers are able to find a price to clear these transactions, but at the same time the valuations are very low historically.
Q: Is there a role for LendingTree in these transactions?
There's demand on the real estate side. We operate a real estate brokerage business that has about 1,000 real estate agents working around the country in 14 different markets, and that business continues to do better every month, so there's demand for those services. There's absolutely purchase-mortgage demand. The thing that makes the business challenging in the short term is the fact that unless you've got at least 10 percent and in most instances 20 percent down, it's very difficult for you to find a mortgage product except in some of the Federal Housing Administration products, so there's just fewer products to help consumers. So there's consumer demand, but not enough product supply, if you will.
Q: Now that you're independent again, was the IAC sale worth it?
It definitely was. What IAC gave us for a five-year period of time was significant capital to invest in the business. If we had not spent those five years, I think we would be in a much weaker position today. We did several acquisitions throughout that time, including LendingTree Loans, moving into the real estate business. We lost money on real estate for three years at significant levels while we got the model right. We invested very heavily in that business. So we're coming out at a time where the assets of the company are very strong, and we're in a much stronger position than any of our competition is and we've got a significant amount of capital that they're spinning us off with. The short term is going to be challenging, certainly, but we feel great about the long-term opportunity, and we're very happy to have been part of IAC.
Q: The company has shown an operating profit in only three of the last eight years. Why would an investor want to own this stock or buy it?
If somebody is investing for the short term, I would not encourage them to be our shareholder. But at the same time if somebody is taking a long-term view of saying, 'this is the management team that was able to raise over a hundred million of venture capital and public capital, get a company public, survive the dot-com crash of 2000 and 2001, hit all their numbers consistently and then get the company sold for substantial shareholder returns and now I believe in their ability to survive this market and to get great returns for shareholders over the long term,' those are the shareholders we want. But if they're thinking about it in the short term, there are probably other stocks for them to play.
Q: Which was worse: the dot-com crash or this current mortgage crisis?
I think the more you go through these times the better you are able to deal with them, so this feels better.
