Wall Street savages Priceline.com
Earnings disappointment panics investors
Shares of name-your-price Web shopping outfit Priceline slid by a whopping $7.89 to $10.75 for a forty-two per cent loss Wednesday on warnings that its third-quarter revenues look set to fall short of expectations.
Disgusted investors dumped shares after learning that the company's Q3 revenues will hit around $340 million, rather than the $360+ million analysts were predicting.
US Bancorp Piper Jaffray lowered its recommendation from 'strong buy' to 'buy', noting that direct ticket sales by airlines may continue eating into Priceline's market. Jeffries Company lowered its recommendation from 'buy' to 'hold'.
The company now predicts a net loss of about a penny a share, basically unchanged from last quarter.
"We expected September to be the strongest sales month in the quarter," Priceline President Daniel Schulman said. "It now appears that September airline ticket sales will be weaker than we experienced in July and August."
Schulman blamed increasing fuel charges by airlines, problems with cancelled flights, and discount fares offered by the airlines themselves. Priceline will report its official Q3 results on 2 November, for better or worse. ®