Priceline.com, the online travel site that has long suffered from
the stigma of the dot-com bubble, on Monday finally took steps to allay
investors’ fears that its stock could ever get delisted.
The Norwalk, Conn.-based company also reaffirmed its previous guidance
for the current second quarter that it would return to profitability with
net income projected at 2 cents a share. The company hasn’t record per-share
profits since the second quarter of 2002.
The announcement comes as favorable sentiment begins to return to the
Internet sector amid reassuring signs that the worst might be over. For
example, McLeodUSAand iVillage
recently announced that they have regained compliance to be listed on the
NASDAQ.
“This reverse stock split enhances our position by expanding investor
interest, reducing transaction costs for trading our stock, making our
results more comparable to peer companies with far fewer outstanding shares,
and allowing priceline.com’s earnings per share on a post-split basis to
more precisely reflect the Company’s operating results,” said priceline.com
President and CEO Jeffery H. Boyd.
The company set the reverse stock split at a 1-for-6 ratio. As a result,
each priceline.com stockholder will receive 1 new share of priceline.com
common stock in exchange for every 6 old shares. The reverse stock split
became effective at 12:01 a.m., Monday.
“Our previous pre-split guidance was for second-quarter earnings per
share in the range of $0.02 to $0.03,” said priceline.com Chief Financial
Officer Robert J. Mylod, Jr. “On a post-split basis, this translates to
earnings of between $0.12 to $0.18 per share, and we remain comfortable with
estimates within that range.”
The average First Call consensus earnings estimate for the second quarter
2003 was for net income of $3.6 million, which translates to $0.10 per share
on a post-split basis.
The reverse split will reduce the number of common shares outstanding to
approximately 37.5 million from approximately 227 million.