Orbitz Worldwide Inc. dropped the most in two months as the resignation of Chief Financial Officer Mitch Marcus amplified investor concern that the company won't be able to expand hotel bookings.
The shares declined 10 percent to $2.98 at the close in New York. The stock had gained 42 percent from the time of Marcus’s appointment in November through Jan. 8, when the Chicago-based company announced his resignation.
Marcus’s abrupt departure has put a spotlight on the company’s struggle to expand beyond its roots in low-margin airline reservations to challenge larger competitors such as Expedia Inc. and Priceline.com Inc. in the more lucrative business of hotel bookings, Daniel Kurnos, an analyst at Benchmark Co., said in an interview.
“The move today is probably a delayed reaction to the CFO resigning,” Kurnos said. “Orbitz has underperformed the other two. They’re really not even in the same league.”
Priceline, the most valuable online-travel agency, generates approximately 90 percent of sales from hotels, Kurnos said. Orbitz got 27 percent of revenue from hotels in 2011, according to Bloomberg data.
Orbitz probably increased total sales 1 percent to $774.6 million in 2012, according to the average of analysts’s estimates compiled by Bloomberg.
David Belmont, vice president of financial planning, replaced Marcus on an interim basis. Marcus left “to pursue other opportunities,” Orbitz said in the filing.
“The short-lived CFO Mitch Marcus leaves the company with the same interim CFO they had before he joined,” said Tracy Young, an analyst at Evercore Partners Inc. “I imagine they’ll have to start another search.”
Orbitz is confident it will find a “strong permanent replacement in a relatively short time frame,” Chris Chiames, a company spokesman, said in an e-mailed statement. “Mitch determined that this was not the right opportunity for him. We and Mitch agreed that moving quickly to resolve the situation was best for all parties.”