Priceline.com bucks the losing trend

Priceline.com, the Internet site that allows buyers to "name their own price" for airline tickets, home financing, hotel rooms, cars, and long distance telephone, bucked the losing dot-com trend when it reported its profitability and record revenue for the second quarter of 2001.

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By  Massoud Derhally Published  August 5, 2001

Priceline.com, the Internet site that allows buyers to "name their own price" for airline tickets, home financing, hotel rooms, cars, and long distance telephone, bucked the losing dot-com trend when it reported its profitability and record revenue for the second quarter of 2001.

Revenues for the 2nd quarter 2001 were $364.8 million, compared to $352.1 in the second quarter of 2000. Pro forma net income was $11.7 million and pro forma EBITDA $13.9 million boosting the company’s cash balance to $165.7 million compared to $138.7 million of the second quarter 2000.

The positive results were largely to due to a cost reduction of the company’s activities. “We expect Priceline.com to continue the steady growth of customers extending beyond our current 11 million customers,” said Richard Braddock, Priceline’s chairman and CEO. “That customer base has the potential to yield even more incremental growth as we develop even more efficient database marketing tools and continue to build on our repeat business ration,” he added.

The company competes in the deep discount travel market, which analysts at Merrill Lynch estimate accounts for 10-20% of the total online travel market. According a research report by Henry Blodget, the senior Internet/electronic commerce analyst at Merrill Lynch, Priceline.com “remains the only “opaque” model that allows airlines and other travel suppliers to sell distressed inventory without jeopardizing their existing fare structures.”

Priceline’s technology was originally licensed by WebHouse Club, which shut down in 2000. Jay Walker, the founder and ex-vice chairman who resigned at the end of 2000, owns about 10% of the company. Other investors include Cheung Kong (Holdings) Limited (15%), Hutchison Whampoa Limited (15%), and General Atlantic Partners (8%). Delta Air Lines holds warrants for 13% of priceline.com.

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