Priceline Forecasts Top Analyst Estimates on Global Growth
May 05, 2011, 5:51 PM EDTBy Ari Levy
(Updates with first-quarter results in seventh paragraph.)
May 5 (Bloomberg) -- Priceline.com Inc., the biggest U.S. online travel agency by market value, forecast second-quarter profit that exceeded analysts’ estimates as the company bolsters hotel bookings in Europe and Asia.
Profit excluding some items in the current period will be $4.70 a share to $4.90 a share, the Norwalk, Connecticut-based company said today in a statement. That exceeded the $4.44-a- share average estimate of analysts surveyed by Bloomberg. The stock rose in extended trading.
Priceline’s Booking.com business in Amsterdam is signing up more hotels across Europe as travelers gravitate to the Web to plan trips. The company’s first-quarter international revenue jumped 80 percent to $389.1 million, topping rival Expedia Inc., which last week reported a 31 percent gain to $327 million. Priceline, known in the U.S. for its name-your-own-price service, expanded into Europe by purchasing Booking.com in 2005, and to Asia with the acquisition of Bangkok-based Agoda.com in 2007.
The online leisure-travel market may grow 16 percent in the U.S. to $113 billion next year from $97 billion in 2010, according to research firm PhoCusWright Inc. The U.S. represents about half of the global market.
S&P 500 Leader
Before today, Priceline shares had jumped fivefold in the past two years, topping every other stock in the Standard & Poor’s 500 Index. In the past 12 months, Priceline has more than doubled, while Bellevue, Washington-based Expedia has gained 5 percent and Orbitz Worldwide Inc. in Chicago has tumbled about 57 percent.
Priceline shares fell $3.59 to $533.97 at 4 p.m. New York time in Nasdaq Stock Market trading before today’s earnings report. The stock gained as much as 3.1 percent to $550.59 after the release.
Separately, Priceline promoted Christopher Soder to chief executive officer of the North American business. Kees Koolen, CEO of the Booking.com unit, is becoming chairman. The company said it’s searching for Koolen’s successor as CEO of Booking.com.
First-quarter profit and sales also topped analysts’ estimates. Net income surged 95 percent to $104.8 million, or $2.05 a share, from $53.9 million, or $1.06 a share, a year earlier. Revenue jumped 38 percent to $809.3 million. Analysts on average predicted profit of $1.76 a share and sales of $780.3 million, according to a Bloomberg survey. Excluding certain costs, profit was $2.66 a share, beating the $2.46 average estimate.
International Growth
For the second quarter, Priceline expects total gross bookings to increase as much as 58 percent from a year earlier, led by a jump of as much as 81 percent in international markets. Revenue will rise 36 percent to 41 percent from a year earlier, indicating sales may reach as much as $1.08 billion. Analysts expected revenue of $1 billion.
Priceline is also benefiting from the acquisition a year ago of TravelJigsaw Ltd., a U.K.-based car-rental service. First-quarter results included $95.7 million of gross bookings from that business, up from $55 million in the fourth quarter.
Competition for investor dollars may increase with more online travel companies preparing to sell shares to the public. Kayak Software Corp., a travel search engine, and HomeAway Inc., an online vacation-rental site, have filed for their initial public offerings in the past six months, while Expedia announced plans last month to spin off its TripAdvisor unit.
--Editors: Jillian Ward, Lisa Rapaport
To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
