MORE NEWS...=Navigant Interview-2: Has Shifted To 70% Prenegotiated Fees
Dow Jones News Service via Dow Jones
The First Call consensus estimate of 6 cents for Navigant's fiscal third
quarter is lower than the year-ago quarter's pro forma results of 8 cents. But
financial chief Griffith said the lower number is due to the 6 cents being
calculated on 13 million shares, versus 11 million shares for the year-ago
quarter.
When Navigant was spun off from U.S. Office Products Co. (OFIS) last June, 11
million shares went to U.S. Office shareholders and 2 million shares went to new
shareholders at $9 each.
Navigant has beaten analysts' estimates the last two quarters, causing the
stock to rise on the days of the earnings announcements. In general, though, the
stock has consistently traded below the initial public offering price. After the
IPO, the stock, quickly dropped to about 6, partially because of selling by
institutions that didn't want stock in a company that was relatively small and
focused on travel, not office products.
Navigant hit a 52-week low of 3 11/16 in October, but it bounced back to a
52-week high of 10 1/4 on Dec. 30 after announcing late Dec. 29 that it would
open a centralized Web site - Navigant.com - in the first calendar quarter of
1999.
The Internet offers some leisure-travel opportunities for Navigant and cheap
transaction costs for its corporate clients. Four Internet transactions can be
handled for every telephone-based transaction, said Chief Executive Adams.
NationsBanc Montgomery Securities analyst David Scharf said that competition
from the Internet is "more of an issue on the leisure-travel side" of the
business, and risks for Navigant stockholders lie more with investor concerns
about commissions.
"I think, in general, the industry risks continue to be the likelihood of
continued pressure by the airlines, and how much commission they're willing to
pay," Scharf said.
Navigant has already greatly reduced those risks, having upped its travel
transactions processed under prenegotiated fees to 70%, compared with 30% a year
ago.
That shift is one reason the commission problem isn't too worrisome to Thom
Nulty, president of Associated Travel, which was acquired by Navigant in late
June 1997.
Plus, Nulty said, "if the commissions went to zero tomorrow," his Santa Ana,
Calif., company and its Navigant parent would still fare well because their
clients need them. It is less expensive for those clients to outsource the
business and pay fees than it is for them to manage their travel themselves, he
said.
Navigant justifies its fees through a number of value-added services. It
analyzes travel patterns, looks at audioconferencing and videoconferencing
alternatives, creates pretrip and post-trip reports, reconciles accounts, and
uses its own AQUA software for quality control and to ensure that the cheapest
fares are found.
Navigant plans to use AQUA on its Web site so that its advantages would be
extended to all users of the site.
Nulty said the acquisition by Navigant gave him "the best of both worlds"
because he retains the close customer contact and local feel of his own company
while gaining the resources and negotiating strength of Navigant.
(MORE) DOW JONES NEWS 01-11-99
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