Expedia raises guidance
May 01, 2001 02:01 PM ET
by Sabrina Korber
Shares in online travel agency Expedia (EXPE) easily outran the broader technology market this morning after the company said it would easily achieve profitability in its fiscal 2002.
The company reported a third-quarter profit of 9 cents per share, which was in line with analyst expectations, according to Thompson Financial/First Call. The company lost 57 cents a share in the year-ago quarter.
Higher guidance
Expedia also raised its guidance for the current quarter and next fiscal year.
The company now expects Q4 2001 revenue to come in between 50 percent and 55 percent higher than in 2000, and sees 2002 profit of between 30 cents a share and 40 cents a share.
Prior to the new guidance, analysts had expected to see a profit of just 13 cents a share for Expedia's fiscal year 2002.
Expedia's Chief Executive Richard Barton said that the company's prospects aren't diminished by the slowing economy.
"[There tend] not to be fewer vacations in tough economic times, [there tends] to be a little less money spent on them, and a little more time spent finding great deals -- which we think is driving people to Expedia.com to make their travel plans," Barton told Upside.com."
Package deals
Expedia, which is about 70 percent owned by Microsoft (MSFT), achieved profitability in Q3 ahead of rival Travelocity (TVLY) in part thanks to the success of its merchandizing revenue model.
"They sell inventory essentially on consignment from the suppliers," said Robert Milmore, an analyst at Arnold & Bleichroeder. "So, while there is lower gross margin on the sale, it's a higher gross profit proposition for the company."
Expedia's revenue rose 88 percent from its intake a year earlier. Sequentially, the company's sales grew by 38 percent.
upside.com |
