Priceline Posts Higher Profit, But Shares Slammed
Online travel agency Priceline.com on Tuesday posted higher second-quarter net income, but shares fell about 15 percent after the company warned of potential troubles related to the economy and airline capacity cuts.
"Economic uncertainty and high fuel prices are affecting the broad travel market and significant airline capacity reductions in the fall will also have a negative impact," Priceline Chief Executive Jeffery Boyd said in a statement.
The company said its second-quarter net income rose to $54.1 million, or $1.08 per share, from $34.6 million, or 79 cents per share in the year ago period.
Excluding one-time items, Priceline earned $1.55 per share, topping forecasts for $1.11 per share, according to Reuters Estimates.
The company said its bookings amounted to $2.1 billion billion, a 71 percent increase over the year-ago period. Bookings on Priceline's international operations increased 80 percent, while domestic bookings increased 59 percent. Priceline's revenue rose 44 percent to $514 million.
"The things that are propelling the business are that we had a very significant increase in airline ticket sales tied to our no-fee initiative and what we think is pretty effective marketing," Boyd told Reuters.
Boyd was referring to its elimination of bookings fees on the purchase of airline tickets.
The online travel business is booming, but as growth in domestic markets levels off, Priceline and competitors like Expedia are looking for growth opportunities in Europe and Asia.
For 2008, Priceline said that it expects to generate about $7.55 billion to $7.9 billion in gross travel bookings. That forecast is consistent with previous guidance.
For the third quarter, the company predicted a 44 percent to 65 percent increase in gross bookings from the year ago period.
The company said it sees its third quarter revenue increasing 30 percent to 35 percent year-over-year.
Priceline stock fell to $98.30 per share in thin after-hours trading from $117.20 at the close of trading on Nasdaq.