Expedia Gains on Profit Outlook

Expedia (Nasdaq: EXPE) picked up US$1.39 to $19.06 in morning trading Monday, after the online travel company said it expects an 88 percent year-over-year increase in revenue for the quarter ended March 31st, along with a profit before non-cash items.

The company, which is controlled by Microsoft (Nasdaq: MSFT) (Nasdaq: MSFT), said it expects earnings before non-cash charges, including amortization of goodwill and intangibles from acquisitions and amortization of stock-based compensation, of about $4 million, or 9 cents per share. Revenue will total about $110 million, the company said.

After all the charges, however, Expedia predicts a loss of about $18 million, or 37 cents per share.

Morgan Stanley Dean Witter reportedly repeated an outperform rating on Expedia shares following the news.

Expedia president and chief executive officer Richard Barton said the expected profit before charges represents a "milestone" that is the result of consumers "embracing Expedia's technology and products."

Said Barton: "Our decision in early 2000 to invest in building a robust merchant business and effectively merchandising merchant inventory has paid off more quickly than we anticipated."

According to Barton, Expedia's new searching and pricing system and related package business helped attract customers.

Revenue from merchant business nearly doubled from a year earlier, to about $67 million, while agency revenue grew about 88 percent to $34 million, Expedia said. Advertising revenue was up about 35 percent to $9.6 million.

Bookings for the quarter rose 68 percent from a year earlier to about $674 million, as more than 1 million customers made travel reservations over the Expedia sites, Expedia.com and Travelscape.com, the company said. Sales in March were particularly strong, it said.

Expedia said it expects to have about $152 million in cash and cash equivalents on hand at quarter's end, up from $118 million on December 31st. The company plans to report results for the fiscal third quarter on April 30th.