Slouching Toward Recovery?

Some companies may be recovering faster than others from the financial hit delivered by the events of Sept. 11, as witness Goldman Sachs’ action on, raising its 2001 earnings estimate as airline travel begins to recuperate.

But other industries may not be so fortunate. Both online real estate company Inc. and communications software firm Openwave Systems Inc. said today that they expect to report third quarter losses.

Priceline’s was the brightest news. The name-your-own-price travel company
said demand for its services is recovering faster than expected after the attacks on the United States and it now expects third quarter 2001 revenue to be at the high end of previous guidance of $280 million to $300 million.

Goldman Sachs raised its estimates, saying that it now expects to see full 2001 earnings of 4 cents a share, up from its earlier estimate of 2 cents. Revenue estimates for the year were raised to $1.17 billion from $1.15 billion.

“Demand has recovered impressively with total bookings back to 81.5 percent in the latest week,” GS said in an advisory to clients.

Priceline stock was up 17 percent or 64 cents in mid-morning trading, to $4.31.

Another bright spot for the travel sector was an announcement from USA Network’s
Barry Diller that his company’s acquisition of travel operation Expedia will not be deterred.

“We intend to close the Expedia transaction,” Diller was quoted as saying at a Goldman Sachs conference in New York. “We’re not completely crazy, or stupid. Any new facts that emerge we will, of course, evaluate, but Expedia is a company that’s at the core of our vision.”

The news is less sanguine for other industries, however.

Westlake Village, Calif.-based Homestore said that it now expects a pro forma net loss of 1 to 6 cents a share for the third quarter as “the attacks compounded an already deteriorating advertising market and caused a loss of business due to the cancellation of sales visits to professional customers.”

The company now projects third quarter revenue to be approximately $114 million to $118 million. Analysts on average had expected a profit of 16 cents a share on revenues of $131.5 million.

Meanwhile, Redwood City, Calif.-based Openwave Systems said it expects a pro forma loss of approximately 1 to 4 cents per diluted share for its first fiscal quarter ended Sept. 30.

The company said revenues are expected to be approximately $115 million to $120 million. Analysts had been expecting positive earnings of 10 cents a share. Goldman Sachs had expected revenues of $145 million. In an advisory today, GS predicted a headcount reduction of 10 to15 percent of the company’s 2,200 employees.

The company’s stock was tumbling on the news, down $3.31 in mid-morning trading to $7.75.

“The tragic events of last month cost us two critical weeks of sales activity in a quarter which historically is already back-end loaded,” said Don Listwin, chairman, president and CEO. “… we are now clearly operating in a more challenging economic environment than at any time in our company’s history.”

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