Following in the wake of downbeat announcements by air travel ticketing rivals Expedia and Travelocity, Priceline.com lowered its third-quarter fiscal guidance and said its bookings so far this week are down 35 to 40 percent.
Goldman, Sachs, meanwhile, reduced estimates for all three of the major publicly traded players in the online travel sector following the events of last week.
Priceline, the Norwalk, Conn.-based name-your-own-price e-commerce company
, which had been making a spectacular comeback after a near-fatal case of the dot-com malaise, said it is seeing “a significant decrease in the company’s forward travel bookings, driven primarily by reduced customer demand, interruptions in availability … and an increase in refunds of previously booked reservations.”
“Based on actual and expected results for the month of September, which include the significant effects of refunds and cancellations of reservations made prior to Sept. 11, Priceline.com now anticipates third quarter 2001 revenues to be between $280 million and $300 million,” said Robert Mylod, Priceline’s chief financial officer.
The company’s earlier guidance called for revenue in excess of $341 million.
All the travel sites, the airlines and the airplane manufacturers are taking huge hits as a result of the tragedy and its expected impact on air travel bookings. Seattle-based Boeing, for instance, is planning to lay off 20,000 to 30,000 commercial airplane workers by the end of 2002 as a result of last week’s events.
Goldman, Sachs today lowered its calendar year 2001 and 2002 estimates for Priceline “due to ongoing factors related to the tragedy.”
GS reduced its revenue estimates to $1.1 billion for 2001 and $1.26 billion for 2002, down from earlier estimates of $1.3 billion this year and $1.5 billion next year.
“While bullish on the e-travel market long term, we believe there is a significant near-term overhang from several factors that impact growth rate considerations,” GS said in an advisory to clients.
On Tuesday, Bellevue, Wash.-based Expedia Inc.
said that bookings had declined by as much as 60 to 65 percent. Meanwhile, Travelocity
said its third quarter revenues will be below its previous guidance.
Fort Worth, Texas-based Travelocity was trying for a positive spin and said late Tuesday that it is maintaining its earnings guidance for the third quarter of 8 to 10 cents a share. But bookings are way down.
“Since Sept. 11, we have already seen bookings rise to more than 50 percent of prior levels compared to 30 percent to 40 percent immediately after the events, and we fully expect improved growth in travel spending in 2002,” said Terrell B. Jones, president and chief executive officer of Travelocity.
For Travelocity, Goldman, Sachs lowered its pro forma untaxed earnings estimates to 25 cents a share for this year and 55 cents for next year, from previous estimates of 29 cents a share this year and 71 cents a share next year. Revenue estimates were lowered to $294.7 million this year and $339.8 million next year from $329.2 million and $419.8 million, respectively.
For Expedia, GS lowered revenue estimates for this year to $267.6 million from $300 million. Expedia is in the process of being acquired by USA Networks.
All three online travel sites have taken a terrific beating in the stock market since Monday. Today Priceline had declined about another 20 percent at mid-day, down 46 cents to $1.89 a share. Travelocity was up 67 cents at $13.08 and Expedia was up 28 cents to $19.92, both stocks making a modest recovery.
At Priceline, Chairman and CEO Richard S. Braddock said in a statement: “Our actual top-line results for the first two-thirds of the quarter clearly demonstrate that we were on our way to meeting our financial targets.” He said that revenues for the first two months of the third quarter were approximately $245 million.
“Predictions as to the extent and the timing of a full recovery are still premature, but we expect our business to recover at roughly the pace of the overall travel industry,” Braddock said. “We believe Priceline.com is ready and able to weather a travel slowdown. At the end of the second quarter 2001, our cash balance was $165.7 million with no debt, and our turnaround activities over the past few quarters made us both profitable and cash flow-positive last quarter.”