Kincheloe. PTVL is featured Motley Fool - Daily Double today.
regards,
Tom
WHERE TO FROM HERE?
The stock's rise checks in, but it doesn't necessarily check out. For all the traffic Preview is landing, it
has not translated into efficiency. Last quarter traffic at the website was up 64% sequentially -- but
bookings only rose by 36%. It's a strong sign of cybersurfer curiosity, but a lower ratio of visitors
actually became customers.
Not that 36% sequential growth in any business can be considered shabby. That would be fine if not
for the fact that the traditional brick and mortar agencies have collectively and successfully flexed
their corporate muscle. Most airlines have slashed their online commission payouts to just 5% of the
gross ticket. At least one carrier has gone to flat $10 royalty for each patron who books a trip
through Preview.
With airline ticketing making up 74% of Preview's business, one can understand why the company is
now trying to stress more lucrative commissions by selling lodging and car rentals.
Will it fly? I am convinced that the niche will grow, but recognize that despite being an originator,
Preview will lose market share as more competitors jump in to get a piece of the ever-growing pie.
Already, Preview seems beat on originality by privately held www.price line.com. At PriceLine, users
actually dictate how much they are willing to pay for a certain flight. Since an empty airline seat is a
complete loss, if the price the flyer is willing to pay is fair and the airline feels that bookings will be
light, PriceLine makes the love connection.
Some may even liken the presence of a PriceLine to that of a price war -- something that Preview, or
any online agency, is ill-fit to fight given the lower commissions. Even the company may agree, since
2 million shares of a 3.5 million share offering announced last month will be sold by Preview insiders.
This does not necessarily mean that the prospects for the company's operations have grown dimmer.
However, it seems that insiders know a good thing when they see it and have decided to cash out at
a lofty price. An investor might want to consider following the pilots by getting off before the next
connection. Bon voyage!
-Rick Aristotle Munarriz |
