From Herb Greenberg's column this a.m.:
Is Preview Travel Really the No. 1 It Claims to Be?
By Herb Greenberg
Senior Columnist
6/29/99 6:30 AM ET
We're getting to the end of the quarter, and Preview Travel (PTVL:Nasdaq) -- like the rest of the market -- is trying to make itself look as good as possible. So this morning it puts out a press release proclaiming that "once again" it was the most-visited travel Web site.
It then cited Media Metrix (MMXI:Nasdaq) figures for April.
APRIL?!
What about May, which, according to my calendar, comes after April? Media Metrix reported May numbers just last week. The tracker included Preview's ranking, but there was no mention of the May numbers in Preview's press release. The reason, according to a Preview spokesman, is because Preview's total count includes visitors from America Online (AOL:NYSE), and it takes Media Metrix an additional few weeks or so to gather that info.
Fine, but the Web plays an increasingly important role in Preview's business, which got its legs on AOL. In addition, Preview proudly points out, month after month, that it ranks in "the top 50 most visited Web properties."
What's more, the AOL contract can't be relied on. Preview's contract with AOL expires in 2002, and can be severed sooner if Preview doesn't generate certain levels of traffic. "If they're that dependent on AOL, what happens when and if that relationship ends?" asks Warburg Dillon Read analyst Sara Zeilstra.
Which is why some analysts, including Zeilstra, believe Preview's Web traffic, by itself, is more important than traffic from the Web plus AOL.
And on that score: Preview lost its travel top spot, for the first time, in May, according to Zeilstra, who relies on Media Metrix. It was passed by Expedia (owned by Microsoft (MSFT:Nasdaq)) and Travelocity (in that order) in unique visitors. And it was left in the dust by Expedia in reach. Reach is the percentage of unique visitors that click into a site vs. rival sites; it's preferred by some analysts because it takes out seasonality. Expedia's reach in May was 4.7% in the home and 7.5% at work, up a half a percent from April. During the same period Preview's reach was 4.5% (home) and 6.2% (work), up about 0.2%.
"For the past couple of months Expedia had been closing the gap on Preview's big lead," Zeilstra says. "Now that gap is finally closed."
Zeilstra, who has no investment banking relationship with Preview, initiated coverage on Preview six months ago with a "hold." While she loves Preview's content, especially Fodor's, she was worried about Microsoft.
"There's nothing like deep pockets to give someone an edge in a rapidly growing space, especially when the leader has yet to replace key members of its management team who recently left," she says. Those dearly departed Preview execs are CEO Ken Orton, who quit in February, and CFO Kenneth Pelowski, who unexpectedly quit in March.
The trend, it would seem, is not Preview's friend.
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