Online Travel Industry Hits Turbulence

Fierce competition in the online travel space may be hurting margins.

At least that’s what analysts concluded after examining Internet conglomerate InterActiveCorp’s results on Monday.

IACI beat estimates by two cents a share with 18-cent adjusted earnings, and revenues of $1.47 billion also came in ahead of analysts’ estimates. But the stock declined 4% after profit margins in its travel unit declined due to higher marketing costs.

CEO Barry Diller tried to quell concerns on a conference call with analysts, saying that that the company will spend less on advertising this year than the $900 million it had forecast. He said high marketing expenses were temporary, and not a response to competition from competitors like Orbitz .

Analysts, however, remained concerned that high advertising costs could persist because of growing competition in the sector. Piper Jaffray analyst Safa Rashtchy, for one, called the company’s results “weak,” and said travel revenue and margins were getting hit harder than expected.

Stocks finally bounced Monday despite nervousness ahead of Tuesday’s Federal Reserve meeting.

The Nasdaq rose 18 to 1938, the S&P 500 added 10 to 1117, and the Dow gained 88 to 10,314. Volume declined to 1.57 billion shares on the NYSE, and 1.99 billion on the Nasdaq. Advancers led 19-13 on the NYSE, and 17-14 on the Nasdaq. Upside volume was 65% on the NYSE, and 63% on the Nasdaq. New highs-new lows were 32-110 on the NYSE, and 51-75 on the Nasdaq.

After the close, Priceline beat estimates, but slipped on news of a secondary offering. Quantum beat estimates. eSpeed warned. Taiwan Semi said it may boost capital spending.

During the day, Adobe surged 6% after raising guidance.

United Online gained 6% after beating estimates.

Radware plunged 29% on a warning.

Symantec rose 4% on news of a new worm.

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