Tuesday, August 7, 2012

Portfolio Relevance
By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) — Priceline.com Inc. on Tuesday reported second-quarter earnings that topped expectations, but its shares fell almost 16% in after-hours trading as the online travel company gave a disappointing forecast based on troubles with the economic situation in Europe.
Priceline PCLN +2.21%  said that for its second quarter, it earned $352 million, or $6.88 a share, on $1.33 billion in revenue, compared with a profit of $256 million, or $5.02 a share, on sales of $1.1 billion in the same period a year ago. Excluding one-time items, Priceline would have earned $4.05 million, or $7.85 a share.
PCLN 679.80+14.68+2.21%
Analysts surveyed by FactSet Research had forecast Priceline to earn $7.36 a share on $1.35 billion in revenue.
However, the company said that for its third quarter, ending in September, it expects to earn between $11.10 and $12.10 a share, excluding one-time items. That forecast fell short of the $12.82-a-share estimate from Wall Street analysts.
On a conference call, Priceline Chief Executive Jeffery Boyd said the company’s forecast is based primarily on effects from the ongoing euro crisis affecting many European economies.
“Deteriorating overall economic trends and headline risks surrounding the euro crisis do cause us to be guarded in our near term outlook,” Boyd said.

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Priceline added that “concerns related to [European] sovereign debt and the viability of the euro have negatively impacted historical operating results and are likely to impact future results.”
The negative reaction to Priceline’s outlook blurred what had been a mostly upbeat second quarter for the company.
Total bookings rose to $7.33 billion, an almost 27% increase from a year ago. International deals accounted for $5.95 billion of Priceline’s booking, while domestic bookings totaled $1.38 billion. Bookings for hotel rooms reached 50.2 million nights, up more than 39% from last-year’s second quarter.
But, in what might have been a sign of fewer people taking trips overseas, Priceline said the number of airline tickets it sold was down by almost 2% from a year ago, to 1.7 million tickets. 

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