"The company's leitmotif was to present rich results simply, intuitively and at lightning speed. Staffing at Kayak has always been tilted towards engineering and even today, when the company has an annual sales rate of more than $300M, it only has 185 employees," writes Abramson, in the post.
"Kayak has become a wonderful example of the extraordinary amplification power that springs from thoughtful software, systems and networking architecture," he adds.
Those lean operations, growing profits, and technical expertise are the keys that made Priceline an interested buyer at a premium priced valuation.
Cantor Fitzgerald analysts highlight that Priceline's acquisition allows the company to better generate user traffic and wean itself from Google, a competitor. "Kayak's acquisition allows Priceline to move up the traffic funnel with a high-quality meta-search product and reduce dependence on Google," writes Cantor. "Kayak's brands recognition, strong query growth and success with mobile are valuable assets," the firm adds.Deutsche Bank analysts assign a low probability that a competitor like Expedia would try to outbid Priceline and they see little reason for antitrust regulators to block the deal, given Kayak's size in comparison to the online travel market. In contrast, Groupon appears focused on workmanlike efforts to grow users and retail relationships to a scale where size is the company's competitive advantage. While chief executive Andrew Mason talks about analytics and targeted ads, the company's results show little in the way of the technical expertise that put it apart from competition. In an effort to add reach, users and products, Groupon's become bloated and unmanageable, as evidenced by high expense, falling gross margins and record low share prices. Bloomberg data shows a consistent path of declining gross margins as Groupon grows revenue - and in recent quarters - escalating losses that have cut shares to all-time lows below $3 a share.
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