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Priceline posts profit
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February 4, 2002: 12:58 p.m. ET
Tops break-even forecast for 4Q but shares plunge on 4Q warning.
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NEW YORK (CNN/Money) - Shares of Priceline.com fell more than 23 percent Monday after the company posted an unexpected fourth-quarter profit from operations Monday but warned on first-quarter results.
Internet auction site Priceline.com (PCLN: down $1.49 to $4.83, Research, Estimates) said it earned $3.3 million, or 1 cent per share, excluding special items, compared with a loss of $25 million, or 15 cents a share, on the same basis a year earlier. Analysts surveyed by earnings tracker First Call expected break-even results.
Revenue increased to $235.3 million from $228.2 million a year earlier. First Call forecast revenue of $225.5 million.
The company said it aims for first-quarter earnings per share excluding special items of between 0 and 2 cents, which puts it at or below the First Call EPS forecast of 2 cents. It also expects revenue of $260 million-to-$290 million in the first quarter, below the First Call forecast of $291 million.
The company said it is being hurt by the drop in air fares and other travel prices that is plaguing the entire travel industry since the Sept. 11 terrorist attack.
"The midpoint of this (revenue) range represents a quarterly sequential increase of 17 percent, which exceeds the sequential increase Travelocity, Expedia and Hotel Reservations Network are calling for," said Chief Financial Officer Bob Mylod. "The biggest upside driver would be a recovery in retail prices."
The company, which sells name-your-own-price air fares, car rentals and hotel rooms, has to contend with airlines' decision to cut prices and capacity, as well as a shift in consumer behavior, said CEO Richard Braddock in an interview with Reuters.
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"This plays through consumers' minds where they are viewing their situation like a fire sale so they tend to make offers for tickets that are substantially lower than where they should be," Braddock said.
The current airline environment is unsustainable as airlines see load factors recover but still face declining revenue, Braddock said. Although Braddock said there has been a gradual improvement in trends, he cautioned that a recovery would take time. 
-- from staff and wire reports
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