Travelocity.com Inc. said its fourth quarter revenues are expected to come in
at $68 million, about 9 percent lower than previous guidance, but analysts at
Goldman, Sachs were relatively sanguine about it.
The online travel operation said that despite the reduced
revenues, “pro forma earnings per share are expected to be within the
guidance given in October of 8 to 11 cents.”
Fort Worth, Texas-based Travelocity also said it expects 20 percent to 30
percent revenue growth for 2002. Still, the market reacted negatively and
Travelocity stock was down $2.79 in the early going to $24.65.
The company, which just announced an online marketing partnership with
Continental Airlines , attributed the revenue shortfall to un
expectedly slow sales of airline tickets during the December holiday travel
period due to airline capacity reductions, combined with the lingering
effects of the September and November tragedies and related air fare
reductions.
Goldman had been expecting $74.2 million in revenues. Analysts said in an
advisory to clients that if there were market share losses, “we think they
would be attributable to less merchant business and thus a lower level of
benefit from the ability to capture discounted fares, diversification of
products, and aggressive pricing by Orbitz (the travel site run by a
consortium of airlines).”
On the positive side, Travelocity said advertising and other non-transaction
revenues are expected to slightly exceed its previous guidance.
GS maintained its fourth quarter estimates for Expedia
and Priceline . For Expedia, the GS revenue estimate
is $65 million, a sequential decline of 18 percent. For Priceline, its
revenue estimate of $232.9 million represents a sequential decline of 23
percent.
“Looking forward to 2002, we expect strong revenue growth of 20 percent to 30
percent,” said Terrell B. Jones, president and chief executive officer of
Travelocity. “Today’s announcement with Continental and arrangements with
other major airlines demonstrate Travelocity’s importance as a distribution
and marketing channel … In December, we … opened our call center in
Pennsylvania dedicated to vacations and cruises and we announced the
implementation of merchant model technology using Contour software. These are
all key aspects of our revenue diversification and growth strategy for 2002.”
The deal with Continental (financial details were not disclosed) lets
Travelocity provide its members with travel deals on Continental via joint
promotions, advertising and e-mail campaigns.