NEW YORK – Internet commerce firm Priceline.com on Wednesday posted a first-quarter net profit after two quarters of losses, as hotel room sales helped offset the slump in air travel.
The company, based in Norwalk, Connecticut, also said it expects second-quarter revenue and earnings to fall within Wall Street's average estimates.
Priceline, which allows Web surfers to name their own prices for air fares, hotel rooms and rental cars, reported net income of $3.9 million, or 2 cents a share, compared with a loss of $13.8 million, or 7 cents a share, a year earlier.
"Basically, we were able to deliver 2 cents GAAP net income on the strong performance of the hotel and rental car business and continued expense discipline,"
Priceline President Jeff Boyd said in a phone interview that the company's strong performance in hotels and car rentals, and continued expense discipline, drove earnings. Hotel and car rental sales comprised 66 percent of its total travel unit sales during the quarter.
"All of the underperformance on the revenue side was associated with the airline ticket business," Boyd said.
There were few tickets available as airlines discounted tickets, particularly in late March, when Easter and spring break occurred, he said.
Revenue at Priceline fell almost 3 percent to $261.9 million, at the low end of revenue expectations it released in February.
Priceline said its first-quarter pro forma income, excluding noncash preferred stock dividends, stock-based compensation and restructuring charges, rose to $5.3 million, or 2 cents a share, compared to a pro forma loss of $6.2 million, or 3 cents a share.
Wall Street analysts, on average, were expecting pro forma earnings of 2 cents a share and revenue of $283.7 million, according to Thomson Financial/First Call. Most analysts were expecting a GAAP net loss for the quarter.
"The revenue were weak as expected. I would like to see what they are doing to improve those revenue over time," said CIBC analyst Paul Keung. "The guidance was in line."
Priceline said it sees second-quarter revenue of $320 million to $350 million, within Wall Street's average expectations. Priceline also said it sees pro forma second-quarter earnings of 3 cents a share to 5 cents a share, within average Wall Street estimates of 4 cents a share, according to First Call.
The company said it was comfortable with its target for 2000 pro forma earnings of 12 cents a share.
"The assumptions we are making is that there will be a modest improvement in our airline ticket bind rate," Boyd said. "We've seen some evidence of that in the quarter, but again only modest."
The guidance also assumed that the company's rental car and hotel business continues their growth, he added.
Shares of Priceline closed up nearly 4 percent, or 20 cents, at $5.25, up 2 percent since Sept. 11 but off 12 percent since the beginning of the year. The shares have underperformed relative to rivals like Expedia.com , which has seen its shares more than double since the beginning of the year.