Expedia reports 4Q loss of $2.76B, while Priceline’s earnings rose 1 pct and beat Wall Street
NEW YORK (AP) — A worldwide drop in travel spending is splitting the fortunes of two major online travel companies, with Expedia reporting a $3 billion write-down and weak revenue Thursday as its smaller rival Priceline.com benefits from a surge in bargain-hunting.
Online travel company Expedia Inc. reported a loss of $2.76 billion, or $9.60 per share, in its fourth quarter, which ended Dec. 31. It wrote down the value of its goodwill and other intangible assets after a sharp drop in the company’s stock price.
Excluding the write-down and other special items, Expedia’s earnings totaled $64.9 million, or 22 cents per share. Its revenue slipped 7 percent to $620.8 million.
Analysts surveyed by Thomson Reuters, who generally exclude one-time items, expected profit of 24 cents per share on revenue of $631.1 million.
Priceline, on the other hand, beat Wall Street’s expectations, reporting that earnings for the quarter ended Dec. 31 were 1 percent higher than a year earlier, at $33.3 million, or 73 cents per share.
Excluding some one-time items, earnings per share totaled $1.29. Priceline’s revenue jumped 21 percent to $406 million.
Analysts expected a profit of $1.05 per share on revenue of $377.8 million.
Norwalk, Conn.-based Priceline also issued a better-than-expected earnings outlook of 85 cents to 95 cents per share.
“The relatively much stronger fourth-quarter results by Priceline suggest to us significantly increased competitive risk (for Expedia) and possibly execution challenges,” Citi Investment Research analyst Mark Mahaney wrote in a note to investors.
UBS Investment Research analyst Kevin Crissey called Expedia’s results appear to mirror the overall deterioration in travel demand.
“Expedia is not a market-share story like Priceline and is unlikely to perform better than the overall (online travel agent) universe, in our view,” Crissey added.
The companies’ divergent fortunes were most apparent in their airline bookings during the quarter.
Bellevue, Wash.-based Expedia said its revenue from airlines dropped 16 percent in the quarter, as the number of air tickets it sold fell 12 percent.
Meanwhile, Priceline said it sold 44 percent more airline tickets in the fourth quarter than it did a year ago. Crissey said this was “particularly impressive” because U.S. airline traffic fell about 9 percent during the quarter.
Crissey and other analysts speculated on Thursday that Priceline’s no-booking fee strategy on airline tickets helped the company outperform its rival.
On a conference call with investors, Expedia President and Chief Executive Dara Khosrowshahi acknowledged that its booking fee may be driving some business to its competitors.
“We are going to be taking a hard look at all aspects of our air business and booking fee is part of it,” the CEO said.
Analysts also credited the company’s success in the downturn to its branding and advertising campaign — featuring William Shatner as “The Negotiator” — which targets price-conscious consumers.
George I. Askew of Stifel Nicolaus & Co. noted that some of Priceline’s rapid growth is also due to its comparatively small size.
Expedia’s stock has lost 67 percent of its value in the past 52 weeks — dropping from a high of $26.04 last February to touch a low of $6 in November. It fell 63 cents, or 7.4 percent, to $7.90 on Thursday.
Priceline shares jumped $11.42, or 16.6 percent, to $80.16. The stock has traded between $45.15 and $144.34 during the past 52 weeks.
