Priceline, Orbitz Take Off

A pair of online travel agencies, priceline ( PCLN) and Orbitz ( ORBZ), announced fourth-quarter earnings that topped Wall Street estimates and showed much improvement from last year's results.

The strong reports came on the heels of InterActiveCorp's ( IACI) bullish comments Monday on the travel business. Shares of priceline and Orbitz rallied in postclose trading Tuesday.

Priceline reported net income of $2.2 million, or 6 cents a share, topping the 4 cents expected by Wall Street and the net loss of $7.4 million, or 20 cents, it had a year ago. Net revenue, which excludes all fees and taxes as well as "Name Your Own Price" sales, came in at $180.2 million, down 8.7% from a year ago.

Gross travel bookings, which includes taxes and fees as well as the purchase price of travel, including those "Name Your Own Price" sales, came in at $256.2 million, a 12.2% increase from last year. Gross profit came in at $31.8 million, up 4.4% from last year, while gross margin rose to 17.7% from the year-ago 15.5%.

"The growth in total gross travel bookings and gross profit reflects a successful transition of our airline ticket business and a positive bottom-line financial result, before any new benefit from new airline ticket advertising," said Jeffery Boyd, priceline's CEO.

Indeed, priceline's move beyond airfare reaped some benefit in the fourth quarter. The company said that bookings of hotel rooms rose 37% year over year, while car rental sales rose 62%. That said, airfare sales continued their decline, dropping 18% year over year, which is an improvement from the drop of 40% seen in the first nine months of fiscal 2003.

Going forward, priceline said it was hopeful that the new pairing of William Shatner and Leonard Nimoy as company pitchmen would boost sales and reverse the slide in airfare sales. In the first quarter, the company said that earnings would come in between 6 cents and 10 cents a share, toward the high end of the 7-cent profit currently expected by Wall Street.

Specifically, priceline said it expected first-quarter gross travel bookings to rise between 25% and 30% over last year, with gross margins coming in between 18% and 20%. In the second quarter, priceline said earnings would come in between 22 cents and 30 cents a share, roughly in line with the 25-cent estimate.

After rising 93 cents in regular trading, priceline shares surged $1.20 to $22.60 in after-hours action.

Elsewhere, rival Orbitz announced a fourth-quarter net loss of $14.6 million, or 40 cents a share, which includes $26.5 million in charges related to stock-option expenses in the wake of the company's December initial public offering.

Excluding all charges, on a pro forma basis, the company would have made $11.9 million, or 30 cents a share, which is up from $3.8 million, or 10 cents a share, over the year-ago period. This result appears to top the 11-cent Wall Street estimate held by three analysts.

Net revenue came in at $69.7 million, up 35% from $51.5 million last year. Gross bookings, which reflect the total value of all travel sold through the Web site, came in at $926.5 million, up 34% from last year.

Going forward, Orbitz said that first-quarter earnings would come in between break-even and 5 cents a share, which is at the low end of the 5-cent analyst estimate. For the full year, Orbitz said that earnings would come in between $1.14 and $1.36 a share, well above the 78-cent analyst estimate.

After slipping a dime during Tuesday's regular action, Orbitz added 83 cents in after-hours trading to $24.73.

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