After the close of trading, the online travel company posted third-quarter results above Wall Street's expectations, performing far better in the aftermath of the Sept. 11 terrorist attacks than most investors expected. The stock rallied after hours, reversing Thursday's 9% regular-session drop.
The company said revenue in the quarter was $302 million, down 11% from the year-ago period but above the sharply reduced consensus. Earnings were 3 cents a share, excluding certain costs. This was 2 cents above Wall Street's estimates, according to Thomson Financial/First Call. In last year's third quarter the company lost a penny a share on $341 million in revenue.
The Norwalk, Conn.-based company also gave guidance for the fourth quarter that exceeded current estimates, although it left open the possibility of a slight shortfall on the earnings side.
In the fourth quarter, priceline expects revenue of $215 million to $235 million, compared with analysts' expectations of $180 million. It expects to break even -- analysts expected a loss of a penny -- but said "results could range a penny or two on either side of that goal."
Investors clearly viewed this as good news and evidence that, while things may be bad for the travel industry, priceline is managing well at a difficult time. Shares slipped 42 cents, or 8.7%, to close at $4.39. Yet in after-hours trading on Island they rebounded, recently trading at $4.77. Shares are getting close to their pre-Sept. 11 level of $5.
priceline said that while demand had rebounded, results remained below par because of refunds processed in the aftermath of the attacks and price cuts at airlines, hotels and rental car companies. (Following the attacks the company warned that quarterly revenue would be between $280 million and $300 million, much lower than the then-consensus of $345 million.)
The company once appeared destined for the Internet graveyard but has apparently engineered a remarkable turnaround. priceline shares once traded around $150 before collapsing last year to about a dollar, following the twin shocks of an earnings warning in September and a key executive departure in November.
The company then embarked on an aggressive restructuring plan that included drastic cost cuts to the tune of $70 million, on an annualized basis, in administrative and marketing costs. In July it turned its first quarterly profit, excluding certain costs.
And the early sign is that Sept. 11 didn't knock it out of the game, either.