Priceline, Orbitz Drop as Forecasts Miss on Europe Crisis
Priceline.com Inc. (PCLN), the biggest U.S. online travel agency by market value, and smaller rival Orbitz Worldwide Inc. (OWW) plunged after quarterly sales forecasts missed estimates as turmoil in Europe curtailed trip reservations.
Priceline tumbled 17 percent to $562.32 at the close in New York, for the biggest decline since 2003. Orbitz declined 25 percent to $3.47, the largest drop since March 2009.
Consumers in Europe -- one of the main engines of growth for Priceline and Orbitz -- put off travel amid an economic crisis there. Priceline had been boosting sales in the region after the 2005 acquisition of Amsterdam-based Booking.com. Results were also dragged down as the strength of the U.S. dollar eroded the value of overseas receipts, said Chief Executive Officer Jeffery Boyd.
“Guidance was a lot worse even off of lowered expectations,” said Herman Leung, an analyst at Susquehanna International Group, in a research note about Priceline.
Third-quarter sales will rise 9 percent to 15 percent, Norwalk, Connecticut-based Priceline said yesterday in a statement. That indicates revenue of $1.58 billion to $1.67 billion, less than the average analyst estimate of $1.8 billion.
Profit excluding some items will be $11.10 to $12.10 a share in the current period, Priceline said. That fell short of $12.79, the average analyst estimate compiled by Bloomberg.
“Weak economic conditions and sovereign debt concerns further contributed to the level of deceleration experienced, particularly in our key European market, which represents about 60 percent of our total booked room nights,” Priceline Chief Financial Officer Daniel Finnegan said on a conference call yesterday.
Priceline competes with Expedia Inc. (EXPE) and Orbitz in the hotel- and airline-reservation market.
Orbitz’s revenue in the third quarter will be $197 million to $203 million, the Chicago-based company said today in a statement. That fell short of the average analyst projection of $216.4 million, according to data compiled by Bloomberg.
“Our outlook for the third quarter and balance of the year is impacted by the global economic uncertainty that intensified during the second quarter and has continued into the third quarter,” Orbitz CEO Barney Harford said in the statement.
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