Travelzoo Misses Numbers

The stock falls 11%.
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Travelzoo

(TZOO) - Get Report

, the once highflying online travel services company, reported a 4% drop in fourth-quarter earnings, missing estimates.

In the quarter, the New York-based company earned $1.65 million, or 10 cents a share, down from $1.73 million, or 11 cents a share, a year ago. Revenue rose 32% to $13.9 million.

Analysts were expecting better numbers. The Thomson Financial consensus estimate had the company earnings 14 cents a share in the quarter and generating revenue of $14.6 million.

The company blamed the shortfall on a combination of factors, including a $584,000 loss incurred by its new operation in the U.K. and a $571,000 expense to comply with the Sarbanes-Oxley corporate governance law. Travelzoo also said revenue was impacted by the bankruptcy filing of two airline customers.

Travelzoo generates most of its revenue by selling advertising on its Web site to travel agencies, airlines and resorts.

"In the future, we do not expect Sarbanes-Oxley compliance costs to remain at this high of a level,'' said Travelzoo Chairman and CEO Ralph Bartel, the company's majority shareholder. "Our reported loss for the U.K. business for Q4 2005 increased because of the hiring of additional staff and the acquisition of additional subscribers.''

Operating expense increased in the quarter 53% to $10.1 million.

In premarket trading, shares of Travelzoo were down $2.38, or 11%, to $19.28.

Two years ago, Travelzoo was one of Wall Street's top performing stocks, peaking at $110 a share in late December 2004.