In a stunning turnaround earnings report, name-your-own-price e-commerce
company Priceline.com reported its first-ever profitable quarter — a
second-quarter pro forma profit of 6 cents a share on record revenues of
$364.8 million.
Wall Street analysts on average had expected pro forma profit of about 1 cent
a share. Pro forma net income was $11.7 million. The revenue figures compared
to revenues of $352.1 million in the second quarter 2000 and $269.7 million
in the first quarter 2001.
After the earnings report came out, Priceline soared $1 in after-hours
trading, to $9.88, after closing at $8.87.
Even on a fully diluted (GAAP) basis, Norwalk, Conn.-based Priceline.com
reported net income for the second quarter of $2.8 million, or 1 cent per
basic and diluted share, compared to a GAAP net loss a year earlier of $11.7
million, or 7 cents per basic and diluted share.
Priceline also improved its guidance for the third quarter, saying it expects
to make a pro forma profit of 5 to 7 cents per share.
The company’s cash balance at the end of the second quarter 2001 increased to
$165.7 million, compared to $138.7 million at the end of same period a year
ago and $142.6 million on March 31, 2001.
“The hard work of Priceline.com’s employees in improving our products and
service while making Priceline.com more efficient has paid off with a
recovery in top line growth and Priceline.com’s first profitable quarter,”
said Jeffery H. Boyd, president and chief operating officer.
During the quarter, Priceline sold a record 3 million units of travel
products, including 1.4 million airline tickets, an increase of 11 percent
over the second quarter 2000 and 34 percent over the first quarter 2001.
Hotel room nights sold increased 57 percent over both the second quarter 2000
and the first quarter 2001. Rental car days sold increased 115 percent and 52
percent over the same periods.
“Online travel appears to be one of the few sweet spots in e-commerce,”
Chairman Richard S. Braddock said. “Based on second quarter results and our
performance in July, we are increasing the guidance we previously gave for
the third quarter and now expect revenues to exceed third quarter 2000
revenues of $341 million. We also would expect pro forma net income to range
from 5 cents to 7 cents per basic share.”
Priceline, which in May replaced CEO Daniel H. Schulman with its chairman, Braddock, was up 38
cents a share or 4.48 percent at the close at $8.87. Braddock was the
company’s CEO from July 1998 to May 2000.
Priceline saw its share price plunge to as little as $1.06 after it ran into
problems last fall. At one time it had traded at more than $100 a share.
The Priceline earnings follow on the heels of those from travel service rival
Expedia Inc., which Monday reported second quarter pro
forma profits of $15 million, or 25 cents a share, beating analysts consensus
estimates by 5 cents. Those numbers compare to a loss of $13.1 million, or 30
cents a share, a year ago and no doubt will please USA Networks Inc., which
is buying a 70 percent interest in Expedia from Microsoft.
Goldman Sachs, in an advisory to clients on Expedia, was bullish, headlining
its research thusly: “Accelerating Growth, Margin Expansion, Raising
Estimates – Sounds GOOD!!” GS raised its yearly estimate for Expedia to 72
cents a share, and $1.10 for 2002.
