Priceline Outpaces Q1 Estimates

Continuing a strong first quarter showing by e-commerce companies in 2000, name-your-price pioneer Priceline.com (Nasdaq: PCLN) reported results Monday that topped both analysts’ expectations and year-earlier figures. Revenue jumped 535 percent to $313.8 million (US$).

The Stamford, Connecticut-based company sells airline tickets, hotel rooms, automobiles, rental cars, home mortgages, groceries and long-distance telephone services at discount rates and takes a commission on sales it generates. The company said its net loss, excluding certain items, was $7.3 million, or 4 cents a share, compared with a loss of $16.8 million, or 12 cents, in the year-earlier quarter.

Analysts were looking for a loss of 6 cents, according to research firm First Call.

More New and Repeat Customers

Priceline said it added a record 1.5 million new customers during the quarter, bringing the total to 5.3 million. Repeat customers during the quarter totaled 830,000 — 500 percent more than in the 1999 first quarter. Gross margin, at 15.6 percent, was also a record.

The company’s television ads featuring actor William Shatner “had an immediate impact” in terms of new customer interest, and were worth the investment, said Chairman and Chief Executive Officer Richard S. Braddock. Airline tickets accounted for a big part of revenue during the quarter, he added.

American Airlines, United Airlines and U.S. Airways all began selling “significant” numbers of tickets through Priceline, Braddock said.

Brand Awareness Rivals Amazon

While other e-commerce companies continue to struggle, Priceline appears to have carved out a lucrative and well-recognized niche for itself. About two-thirds of U.S. adults are aware of Priceline as a brand, Braddock said, placing the company in “a statistical dead heat” with Amazon.com (Nasdaq: AMZN) as the most recognized e-commerce brand in the country.

Priceline spent $40 million in the quarter on sales and marketing, and plans to double its ad spending over the year.

New Officers, New Products

Priceline added a new chief financial officer during the quarter, as Heidi Miller switched over from Citigroup, where she had served as CFO. The company also named a new chief marketing officer, Michael McCadden, who had been with Gap, Inc.

“Priceline.com has assembled a management team deeply experienced in building and running large scale businesses,” said Daniel H. Schulman, president and chief operating officer. “The experience of our team is already paying off.”

Priceline is testing a new long-distance telephone service and has launched a mortgage service in the 48 contiguous U.S. states. Its mortgage loan business doubled in the quarter, according to the company.

The company also expanded its automobile service to 48 states and, as a result, its auto business tripled in the fourth quarter. Its WebHouse Club home grocery delivery service, an independent licensee of Priceline, also expanded during the quarter, the company said.

Industry Results Ahead So Far

Priceline is the first of the large e-tailers to report results for this year’s first quarter. Results from smaller companies have, for the most part, been better than expected and ahead of year-earlier levels, a trend that could help boost battered stock prices.

As a group, Internet companies are doing an average of 117 percent better than a year ago, according to First Call. Amazon is set to report its results on Wednesday.

Despite record results, investors are not enthusiastic about Priceline. The first quarter results were not enough to boost Priceline shares, which fell early Monday along with other technology issues.

The stock was down 2 3/4 at 65 1/8, well below its 52-week high of 165, but above its recent low of 45 1/2.

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