More Bad News at Priceline

Name-your-own-price e-commerce site Priceline.com watched its
stock drop 42 percent Wednesday after
the company said third quarter revenues would be “below the range of
analysts’ estimates.”


The bad news followed a flurry of negative publicity for the company last
week involving media reports about unhappy customers and spurious advertising.


The company’s stock, which closed yesterday at $18.625, at one time had been
a darling of the dot-com world, trading at more than $104.


The company said in a statement released this morning that it expects that
third quarter revenues would be in the $340 million to $345 million range,
compared to
analysts’ estimates of approximately $360 million to $380 million. By
comparison, third quarter 1999 revenue was $152.2 million.


Priceline.com has yet to turn a profit, and posted a loss of seven cents a
fully diluted share in the second quarter of this year. First Call has been
reporting an analyst consensus of essentially flat earnings for the third
quarter and positive earnings for the fourth quarter. Now, the company said
it expects a third quarter loss on a par with that of the second quarter.


The company said that revenues will be below expectations “due to a shortfall
in revenue from the sale of airline tickets, which it expects will be
approximately $20 million to $25 million less than the company recorded in
the second quarter.”


Priceline.com said that although total customer offers are expected to be at
or above second quarter 2000 levels, revenue from airline ticket sales
decreased as a result of a decline in the percentage of offers accepted and a
lower average offer price.


“We are disappointed that our third quarter 2000 revenues will not be in the
range of analysts’ estimates or our earlier expectations due to a shortfall
in revenue from airline
ticket sales,” said Daniel H. Schulman, priceline.com’s president and chief
executive officer. “Based on historical experience, we expected September to
be the strongest sales month in the quarter. It now appears that September
airline ticket sales will be weaker than we experienced in July and August.'”


Last week the media got hold of reports that celeb spokesman William Shatner
doesn’t actually use the service himself, and there were reports that the
company was kicked out of the Better Business Bureau in Connecticut after 300
complaints were reported since 1998 in the company’s home state.


Despite all the negative news, the company is still trying to put on a happy
face.


“We anticipate that Priceline’s non-airline revenues in the third quarter
will grow by approximately 20 percent compared to the second quarter of 2000
and we expect to improve our operating margins from second quarter 2000
levels,” Schulman said. “We
continue to be focused on building priceline.com as a major consumer brand
and as a broad horizontal e-commerce platform.”


Priceline.com will report its third quarter results on Nov. 2.

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