Bloomberg News

Priceline.com’s Shares Rise After Profit, Sales Exceed Analyst Estimates

February 28, 2012

The priceline.com homepage is displayed on a computer screen in New York. rentals. The number of countries Priceline serves has jumped more than 60 percent in the past year to more than 160. Photographer: Daniel Acker/Bloomberg 2

The priceline.com homepage is displayed on a computer screen in New York. rentals. The number of countries Priceline serves has jumped more than 60 percent in the past year to more than 160. Photographer: Daniel Acker/Bloomberg 2

Priceline.com Inc. (PCLN), the biggest U.S. online travel agency by market value, reached the highest in more than a decade after fourth-quarter profit and sales beat analysts’ estimates.

Priceline gained $41.22, or 7 percent, to $632.76 at 4 p.m. in New York. That’s the highest closing price since July 1999, four months after Priceline’s initial public offering.

The company has weathered the European debt crisis better than Expedia Inc. (EXPE) and Orbitz Worldwide Inc. (OWW), and it’s expanding into emerging markets and new businesses such as car rentals. The number of countries Priceline serves has jumped more than 60 percent in the past year to more than 160.

“They’re seeing accelerating growth in Europe despite the macro issues that are in place,” said Mike Olson, an analyst at Piper Jaffray Cos. in Minneapolis. He recommends buying the Norwalk, Connecticut-based company’s shares, which he doesn’t own personally. “They’re trying to position themselves for the continued offline-to-online transition in travel bookings in emerging markets.”

Excluding some items, profit was $5.37 a share in the period, the company said in a statement. Analysts had projected $5.06 on average, according to data compiled by Bloomberg. Sales climbed 35 percent to $990.8 million, topping the $973.3 million estimate.

Profit Forecast

First-quarter profit will be $3.80 to $3.90 a share, excluding some items, Priceline said. That beat the $3.71 average estimate. Sales will rise 22 percent to 27 percent. Analysts had predicted a 25 percent gain to $1.02 billion.

Net income in the fourth quarter rose to $225.7 million, or $4.41 a share, from $135.7 million, or $2.66, a year earlier.

The biggest source of growth at Priceline is Booking.com, the Amsterdam-based European unit that the company acquired in 2005. More than 60 percent of Priceline’s revenue comes from overseas, predominantly Europe. International bookings in the quarter jumped 66 percent to $3.91 billion, helped by Agoda.com, the Bangkok-based company Priceline bought in 2007. U.S. bookings rose 16 percent to $1.04 billion.

Priceline’s competitors haven’t fared as well. Earlier this month Expedia posted fourth-quarter revenue of $787.1 million, almost $30 million less than analysts had estimated. Sales at Orbitz dropped 2.9 percent in the period to $177.1 million, and the company cited a “weaker overall travel market,” because of conditions in Europe.

Car Rentals

To expand beyond hotels and airlines, Priceline acquired car-rental company TravelJigsaw Ltd. in 2010. The company said that global rental car days rose 34 percent from a year earlier.

“Our aim is to continue building our strength in new markets, gain share in core markets, and pursue innovation, which we believe will allow us to build on our leadership position as the markets change,” Chief Executive Officer Jeffery Boyd said in the conference call. Thailand, Hong Kong and Singapore have emerged as strong markets, he said.

Last month, Priceline “killed off” William Shatner’s “Negotiator” character from its commercials, after using him as a celebrity spokesman for 14 years. The company is shifting its focus to a published-price hotel service, rather than the name-your-own-price option promoted by the former Captain Kirk.

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


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