Expedia Bests Estimates, To Post Profits

Renewing hopes that independent online travel sellers can compete and
survive against well-known airlines selling tickets online, Expedia said it expects to report its first quarterly operating
profit — a declaration that bested analyst’s estimates.

Expedia said it expects earnings before noncash items to be about $4
million, or nine cents a share, for its fiscal third quarter ending March
31, compared with a year-earlier loss of $21.4 million, or 50 cents a share.

Analysts surveyed by First Call/Thomson Financial had expected a loss of 13
cents a share before items, and Expedia had predicted earlier that it would
not reach profitability until June 2002.

The company, which is 70 percent owned by Microsoft , went
online in October 1996 and sold shares to the public in November 1999.

Expedia reported revenue for the quarter was about $110 million, up about 88
percent from a year earlier and 38 percent from the previous quarter.

After non-cash items, including amortization of goodwill and intangibles from
acquisition and stock-based compensation, the company said it expects to
post a loss of about $18 million, or 37 cents a share, compared with a
year-earlier loss of $66.5 million, or $1.56 a share.

Richard Barton, president and CEO of the Bellevue, Wash. company, credited
the Expedia’s decision to invest in building a merchant business, which
cross promotes merchant inventory, as the catalyst for Expedia’s positive
earnings report.

Both Expedia and its main competitor Texas-based Travelocity use a business
model which calls for snaping up huge blocks of hotel accommodations and
airline seats at a discounted price to sell to the public at a higher price.
But major airlines have taken note and are now actively ramping up online
endeavors to win customers over with their well-established, familiar

Today, Expedia said that strong seasonal travel-buying and “[customer’s]
rapid adoption of the Internet for booking travel” helped drive gross
bookings to approximately $674 million for the quarter, up approximately 68
percent from the year ago quarter and 42 percent from the previous quarter.

In early morning going, shares in Expedia were trading at $18.35, up 68
cents from Friday’s close at $17.67.

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