>Last Updated: July 31 2001 22:57GMT
Priceline.com joined the small band of profitable e-commerce companies, reporting both a better-than-expected pro forma profit and its first small net income under US accounting rules.
Rick Braddock, chairman and chief executive, said: "We have essentially completed our turnaround plan and put the business in a position to perform attractively going forward."
Priceline reported net income of $2.8m or 1 cent per share, on revenues of $364.8m, which were 22 per cent better than its previous guidance and 3.6 per cent up from a year before.
On a pro forma basis, excluding severance payments and other charges, net income was 6 cents per share - well ahead of analysts' 1 cent consensus estimate.
The group, which lets customers bid for unsold airline seats and hotel rooms, has sharply reined in costs since suffering a plunge in business late last year.
Mr Braddock said: "One of the problems the internet had happen to it was that our disciplines [were] somewhat impaired by the venture capital greed and mania that went on." In the past seven months, he added, Priceline had reduced its annualised costs by $70m.
Priceline's stock, which fell from almost $30 to little over $1 between last September and January, has begun to recover and stood at $8.87 before the after-hours earnings announcement.
The improvement in the stock price has already created a large paper profit for Li Ka-shing, the Hong Kong tycoon who this year amassed a 30 per cent stake through his Cheung Kong and Hutchison Whampoa vehicles.
Mr Braddock said earnings were better than expected because Priceline's brand had "basically fully recovered" in the eyes of consumers. The company added 1m customers in the second quarter, bringing its user base to 11m, and repeat business rose to 61 per cent of the total, up from 39 per cent a year before.
The group was helped by a sharp downturn in business travel in the US, which left airlines and hotels with large amounts of unsold inventory. Mr Braddock admitted that the "vicious" environment for airlines also lowered revenues per transaction because ticket prices came down.
Cash balances increased from $143m to $166m over the three months, and should exceed $175m in the third quarter, Priceline said. Third quarter sales should exceed the $341m recorded a year before, Mr Braddock said, and pro forma earnings should be 5-7 cents per share. |
