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Priceline beats Street, raises the bar
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November 1, 2001: 5:07 p.m. ET
Company's 3Q operating profit, revenue exceed all expectations.
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NEW YORK (CNNmoney) - Priceline.com on Thursday reported third-quarter sales and profit that beat expectations and raised its financial targets for the current quarter, crediting its year-long restructuring program for the improved outlook.
After the closing bell, the company said its third-quarter earnings, excluding one-time items, totaled $6.3 million, or 3 cents per share. That compares with an operating loss during the same quarter a year ago.
At $302 million, Priceline's third-quarter revenue fell 11.4 percent from $341 million a year ago but still exceeded expectations.
Analysts generally had expected the company to report a profit of a penny per share on roughly $290 million in sales, according to a survey conducted by earnings tracker First Call. And on Oct. 2, Priceline (PCLN: Research, Estimates) itself said it was expecting to report revenue on the high end of its forecast range of $280 million-to-$300 million.
Accounting for option payroll taxes, amortization of stock-based compensation charges and a non-cash preferred stock dividend, Priceline's net loss for the quarter was $3.5 million, or 2 cents per share.
In the wake of the Sept. 11 terrorist attacks on the United States, some industry analysts had expected Priceline, which derives much of its revenue from online airline ticket sales, to be among the hardest hit by a slowdown in air travel.
The company, which offers an online "reverse auction" service through which customers can "name their own price" for products and services such as airline tickets and rental cars.
Priceline said that while demand for travel products has substantially recovered following the attacks, unit sales and revenue from sales of travel products in the quarter trailed that demand because of refunds and pressure from deep discounting of published retail prices instituted by airlines, hotel companies, and rental car companies to spur near-term demand.
"The rapid recovery of consumer demand for Priceline.com's travel products is a tribute to the strength of our brand, the loyalty of our customers and the compelling value we offer to consumers," Jeffery H. Boyd, its president and chief operating officer, said in a statement.
Boyd also highlighted Priceline's hotel and rental car businesses, which he said constituted 42 percent of booked offers in the third quarter, compared with 28 percent a year ago.
"For the past two quarters, hotel and rental car unit sales have exceeded sales of airline tickets," Boyd said.
Moving forward, Priceline executives said they expect the company to break even in the fourth-quarter, excluding one-time items, on revenue ranging between $215 million and $235 million.
The most recent consensus estimate of analysts polled by First Call was for a loss of a penny per share on roughly $180 million in sales.
Richard S. Braddock, Priceline's chairman and CEO, attributed the more optimistic outlook in large part to the cost-cutting plan the company began to put in place a year ago, which included substantial layoffs and the exit from non-core businesses such as gasoline and groceries.
"We have seen a demand-driven recovery in our U.S. travel business, which has developed a strong, loyal consumer franchise," Braddock said.
"Further, Priceline's scope has broadened to reduce its reliance on our air product, for example, through the continued strength of the hotel and rental car products and the progress achieved in building our mortgage business," he added.
After rising nearly 12 percent to $4.40 on Nasdaq ahead of the earnings news, Priceline shares gained another 43 cents to $4.83 in extended-hours trade. The stock has fallen more than 53 percent over the past year from a high of $10.53. 
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