RealTime IT News

More Bad News at Priceline

Name-your-own-price e-commerce site Priceline.com watched its stock drop 42 percent Wednesday after the company said third quarter revenues would be "below the range of analysts' estimates."

The bad news followed a flurry of negative publicity for the company last week involving media reports about unhappy customers and spurious advertising.

The company's stock, which closed yesterday at $18.625, at one time had been a darling of the dot-com world, trading at more than $104.

The company said in a statement released this morning that it expects that third quarter revenues would be in the $340 million to $345 million range, compared to analysts' estimates of approximately $360 million to $380 million. By comparison, third quarter 1999 revenue was $152.2 million.

Priceline.com has yet to turn a profit, and posted a loss of seven cents a fully diluted share in the second quarter of this year. First Call has been reporting an analyst consensus of essentially flat earnings for the third quarter and positive earnings for the fourth quarter. Now, the company said it expects a third quarter loss on a par with that of the second quarter.

The company said that revenues will be below expectations "due to a shortfall in revenue from the sale of airline tickets, which it expects will be approximately $20 million to $25 million less than the company recorded in the second quarter."

Priceline.com said that although total customer offers are expected to be at or above second quarter 2000 levels, revenue from airline ticket sales decreased as a result of a decline in the percentage of offers accepted and a lower average offer price.

"We are disappointed that our third quarter 2000 revenues will not be in the range of analysts' estimates or our earlier expectations due to a shortfall in revenue from airline ticket sales," said Daniel H. Schulman, priceline.com's president and chief executive officer. "Based on historical experience, we expected September to be the strongest sales month in the quarter. It now appears that September airline ticket sales will be weaker than we experienced in July and August.'"

Last week the media got hold of reports that celeb spokesman William Shatner doesn't actually use the service himself, and there were reports that the company was kicked out of the Better Business Bureau in Connecticut after 300 complaints were reported since 1998 in the company's home state.

Despite all the negative news, the company is still trying to put on a happy face.

"We anticipate that Priceline's non-airline revenues in the third quarter will grow by approximately 20 percent compared to the second quarter of 2000 and we expect to improve our operating margins from second quarter 2000 levels," Schulman said. "We continue to be focused on building priceline.com as a major consumer brand and as a broad horizontal e-commerce platform."

Priceline.com will report its third quarter results on Nov. 2.