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Expedia's profit beats Street
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October 22, 2001: 6:07 p.m. ET
Online travel service provider tops estimates but lowers revenue forecast.
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NEW YORK (CNNmoney) - Online travel services provider Expedia.com Monday logged a fiscal first-quarter profit that soared past Wall Street's expectations but lowered the bar for the current quarter and the remainder of the year.
After the closing bell, Expedia said it earned $15.1 million, or 24 cents per share, during the quarter ended Sept. 30. That excludes one-time items and compares with an operating loss of $1.6 million, or 4 cents per share, a year earlier.
Analysts generally had expected Expedia (EXPE: Research, Estimates), to report an operating profit of 14 cents per share, according to a survey conducted by earnings tracker First Call.
Including one-time charges, Expedia's net loss for the quarter was $4.8 million, or 9 cents per share, which narrowed from a net loss of $30.8 million, or 69 cents per share a year ago.
At $79.5 million, Expedia's fiscal first-quarter revenue rose 89 percent from the same quarter last year.
Because of the Sept. 11 terrorist attacks and their subsequent impact on travel, most analysts had reduced their estimates for Expedia's fiscal first quarter.
During a teleconference with analysts Monday evening, Expedia executives said the company's revenue had averaged $7 million per week prior to Sept. 11 and fell to roughly $3.5 million per week during the final three weeks of the quarter.
Additionally, they said the company's profit margins were pressured because of increased call-center costs associated with the Sept. 11 attacks and the processing of cancellations of travel plans by customers.
"The full force of September's events will be felt in the current quarter and we will see declines," said Richard Barton, Expedia's president and CEO.
"But we anticipate staying in the black and are encouraged by current booking activity," Barton added.
During the first two weeks in October, Barton said Expedia's total transactions had recovered to between 80-85 percent of pre-Sept. 11 levels. However, Expedia executives pointed out that hotel bookings had improved more than airline bookings, which they attributed in part to the heavily discounted fares many airlines are publishing in an effort to get people flying again.
At the same time, Greg Stanger, Expedia's chief financial officer, said the company expects revenue in the current quarter to decline to roughly $65 million. One analyst who had provided an estimate to First Call had been expecting fiscal second-quarter revenue nearer $84 million.
For all of fiscal 2002, which ends in June, Stanger said he expects revenue of about $310 million, where Wall Street's estimates generally had been running nearer $331 million, according to six analysts polled by First Call.
"We are encouraged by how quickly our business has bounced back, but believe that it's safest to assume that there will be little change in consumer buying patterns until after the December quarter and further to assume the normal annual slowdown in the final two weeks of December," Stanger said.
In contrast, Priceline.com (PCLN: Research, Estimates), which many thought would take the biggest hit in the wake of the terrorist attacks, said earlier this month that demand for its services was recovering faster than expected, and Priceline executives said they expect revenue in the current quarter to be toward the high end of their projected range of $280 million-to-$300 million.
In July, USA Networks agreed to buy Microsoft's controlling interest in Expedia for as much as $1.5 billion in stock.
Expedia's online properties, together with USA's interest in Hotel Reservations Network, will form the nucleus of the USA Travel Group portfolio, which collectively handled about 16 percent of the $14 billion in online travel transactions in 2000. 
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