Priceline Beats Revised Estimates

Name-your-own-price travel company Priceline.com Thursday beat revised estimates for third-quarter earnings, coming in with a pro forma profit of 3 cents a share on earnings of $6.3 million.

The Norwalk, Conn.-based company’s revenues for the third quarter were much reduced as a result of the events of Sept. 11, coming in at $302 million compared to $341 million in the same period a year ago.

Priceline also said it expects a pro forma break-even fourth quarter. The third-quarter pro forma earnings compare with a pro forma loss of 1 cent a share a year earlier.

Wall Street analysts on average had expected Priceline to report pro forma third-quarter earnings of a penny a share on revenue of about $290 million.

Priceline.com said its consumer franchise grew to nearly 12 million customers with a record 63 percent repeat business

Priceline Chairman and CEO Richard S.Braddock said in a conference call that the Sept. 11 attack cost the company lost revenue and increased its customer service costs, and he added that “the impact will extend into the fourth quarter and perhaps beyond.”

“We are targeting fourth-quarter revenues in the range of $215 million to $235 million, which reflects today’s travel industry conditions as well as the usual seasonal weakness of our fourth quarter,” said Braddock.

“However, this year we are managing the fourth quarter to a goal of pro forma break-even earnings per share. Results could range a penny or two on either side of that goal. This compares to fourth quarter 2000 revenues of $228 million and a pro forma net loss of 15 cents per diluted share,” he said.

“The rapid recovery of consumer demand for priceline.com’s travel products is a tribute to the strength of our brand… (and) the loyalty of our customers …,” said Priceline.com President and Chief Operating Officer Jeffery H. Boyd. “We are also pleased with the continuing strength of our hotel and rental car businesses. These non-air categories constituted 42 percent of our booked offers in the third quarter 2001, compared to 28 percent a year ago. For the past two quarters, hotel and rental car unit sales have exceeded sales of airline tickets.”

Boyd echoed Braddock, saying at the conference call that Priceline’s
hotel product recovered faster than any other product line after the terrorist attacks.

Earlier this week Priceline launched new marketing and security initiatives, expanding its relationship with Visa U.S.A. Priceline said it will be the first online travel company to implement “Verified by Visa,” a password-based authentication system for Visa cardholders.

For the second quarter, Priceline reported its first pro forma profit ever — 6 cents a share on record revenues of $364.8 million.

Priceline saw its share price plunge to as little as $1.06 after it ran into problems last fall. At one time it had traded at more than $100 a share. The stock closed Thursday at $4.40, down 41 cents.

The stock had climbed in recent weeks after dropping as low as $1.80, or more than 60 percent, in the days after the events of Sept. 11. Ahead of the earnings report, Merrill Lynch Internet analyst Henry Blodget reportedly cut his revenue estimates for Priceline to $1.2 billion from $1.6 billion for 2002 and to $1.5 billion from $1.9 billion for 2003.