Shares of

Expedia

(EXPE) - Get Report

jumped after the beleaguered online travel agency reported second-quarter results that surpassed Wall Street's low expectations.

Shares rose 7% in early trading despite worries about the travel business in the wake of a foiled terror plot in the U.K.

The Bellevue, Wash., company said net income rose 30% to $95.5 million, or 27 cents a share, compared with $73.4 million, or 22 cents, a year earlier. Excluding some costs, profit was $118.2 million, or 32 cents. Sales rose 8% to $598.5 million, helped by increases in its hotel business. Analysts polled by Thomson Financial had forecast earnings of 24 cents and sales of $576.9 million.

"Our second-quarter results improved markedly from the first quarter, but we're still under construction for the kind of sustained growth we believe is very much in Expedia's future," says Barry Diller, Expedia's chairman and senior executive, in a statement.

Shares of Expedia have slumped 42% this year, hurt by brutal price competition from both rivals and suppliers. The shares have underperformed rivals including

Priceline

(PCLN)

and

Sabre Holdings

(TSG) - Get Report

, parent of Travelocity. Expedia recently completed the repurchase of 20 million shares and has authorized another buyback of as much as 20 million shares, Diller says.

Earlier this week, Priceline surprised Wall Street with better-than-expected second-quarter results. The Connecticut-based company also gave bullish earnings guidance for the rest of the fiscal year. Sabre Holdings's results were also better than Wall Street expectations.

Despite the strong performance, Wall Street analysts don't see any sign that the competition will let up in the online travel market.

Expedia rose $1.54 to $14.86.