Even the usually glib Barry Diller struggles to describe InterActiveCorp (IAC), the crazy quilt of electronic commerce that he has stitched...

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NEW YORK — Even the usually glib Barry Diller struggles to describe InterActiveCorp (IAC), the crazy quilt of electronic commerce that he has stitched together during the past decade.

The multimedia magnate sputters through a tortured analogy likening IAC to a “concept beast of conglomeration” before acknowledging his New York-based company consists of so many disparate parts that it seems more like a jumbled puzzle.

“When you are beginning something, the early steps — at least in my case — can be quite messy,” Diller told The Associated Press during a recent interview from his 43rd floor office overlooking Central Park.

Diller, IAC’s chief executive and controlling shareholder, hopes his strategy becomes clearer after he wraps ups a $1.9 billion takeover of online search-engine maker Ask Jeeves and then spins off one of his biggest attractions, Expedia.com, into a separate company based in Bellevue. Both transactions are expected to be completed later this month.

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It represents another roll of the dice for Diller, whose twists and turns at IAC have caused many investors to wonder whether the billionaire has lost his golden touch after decades of success as a top television and movie executive for ABC, Paramount Pictures and Fox.

The doubts have caused IAC’s stock to plunge by more than 40 percent during the past two years, wiping out about $5 billion in shareholder wealth. Since 2002, Diller has spent more than $10 billion building IAC into an Internet powerhouse, but its stock has shriveled from a high of $42.74 to a close of $24.15 yesterday.

“There’s a lot riding on this acquisition,” Piper Jaffray analyst Safa Rashtchy said. “All eyes are on Barry now, waiting to see what he can do with Ask Jeeves.”

Although Ask Jeeves has been overshadowed by better-known search engines, Diller is convinced the Oakland, Calif.-based company is the missing ingredient in his Internet stew.

If it pans out the way Diller envisions, Ask.com and several affiliated search engines, including Excite.com and iWon.com, will become the mortar binding all of his other Web sites — a so-far dysfunctional family delving into travel, lending, ticketing and matchmaking. For example, a lonely heart looking for a date on Match.com could use the Ask.com to plan a night on the town — a journey that might ultimately lead to Hotels.com, one of the sites to be included in the Expedia spinoff.

Vision for Ask.com

Diller ultimately wants to transform Ask.com from a second-tier search engine to a serious threat to Google. He is mulling the possibility of breaking away from Google’s profitable online-advertising network after Ask Jeeves’ contract expires in 2007 to launch a rival marketing system, building upon his years of media experience.

The commissions Ask Jeeves collected from Google helped lift the company to a $52.2 million profit on revenue of $261 million last year.

By 2008, advertisers will spend about $9 billion annually to have their Web links posted alongside search results and other relevant content, up from $5.4 billion this year, estimates Forrester Research.

Rashtchy doubts Diller will be able to create another advertising network, but he thinks the executive’s media savvy and IAC’s deep pockets will give Ask Jeeves a legitimate shot at chipping away at the market share of Google and Yahoo!, which runs the Internet’s second most popular search engine.

IAC is estimated to have about $3 billion in cash, including about $1 billion that the company expects to net from the recent sale of its 5.4 percent stake in Vivendi Universal Entertainment — a deal that ended an antagonistic alliance formed three years ago when Diller sold the USA network.

Diller seems more likely to use the cash to invest in Ask Jeeves than to finance a potentially disruptive shopping spree.

“Everyone wants to see how he integrates Ask Jeeves with everything else he has bought before he does anything else,” Rashtchy said.

IAC’s cash, supplemented by $100 million in free advertising on NBC television included in the Vivendi deal, will give Diller the financial firepower to lure Web surfers away from Google or Yahoo!.

Encore of sorts

If he pulls it off, it would be an encore of sorts for the 63-year-old Diller, who in 1987 as CEO of Fox set out to create a fourth television network as an alternative to ABC, NBC and CBS.

“We came along at the right time at Fox with a differentiated product and I think the analogy to Ask is apt,” Diller said. “It’s a reasonable parallel to think that we can say, ‘Here’s a service with different features from Google and it is really good.’ It’s a bet that we are making and over time the world is going to get to see the result.”

Ask Jeeves has much room to make up. Through May, it held a 6.2 percent share of the U.S. search-engine market — trailing Google (37.5 percent), Yahoo! (30.1 percent), Microsoft.’s MSN (15.2 percent) and Time Warner’s AOL (9.3 percent), according to comScore Networks.

“Search is a huge market, but they are a very small player,” said ThinkEquity Partners analyst John Tinker. “They are going to have to really come up with something to stretch the imagination to gain ground.”

The wide gap separating Ask Jeeves and Google held down the price that Diller had to pay to get into the search-engine market. IAC is paying the equivalent of eight cents for each Web page called up through the year by Ask Jeeves visitors. When Diller announced the deal in March, Google’s market value was 58 cents per page view.

“If he can find a way to make Ask Jeeves’ users more loyal and engaged, the acquisition price will be a real bargain,” said Compete analyst Greg Saks. “But it’s going to be really tough to brand (Ask) as a leading search property because Google is already so ingrained in people’s minds.”

Diller has more leeway than most CEOs to do things his way because he controls 62 percent of IAC’s stock.

That power has freed him from fixating on hitting the quarterly earnings targets set by Wall Street analysts, giving him more flexibility to gamble.

“When you are trying to do what we’re doing, if you’re not wrong about some things, you’re really wrong,” Diller said. “We tolerate mistakes so long as they are not the big mistake.”