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Priceline.com Inc., the largest U.S. online-travel agent by market value, forecast second-quarter profit that missed analysts’ estimates as international expansion exposes the company to economic swings in Europe.
Profit, excluding some items, will be $8.87 to $9.45 a share in the current period, the Norwalk, Connecticut-based company said in a statement today. Analysts were projecting a profit of $9.59, according to data compiled by Bloomberg.
Priceline, fueled by its Amsterdam-based Booking.com unit, has bolstered accommodation-booking revenue by signing on more international hotels than competitors such as Expedia Inc. That’s left the company vulnerable to economic swings in Europe, where Greek unemployment rose to a record in February, and Portugal and Ireland have been forced into bailouts.
“We continue to see economic uncertainty in certain regions, and competition in the online travel sector remains intense,” Priceline Chief Executive Officer Jeffery Boyd said in the statement.
Profit in the first quarter, excluding some items, rose to $5.76 a share from $4.28 a year earlier, Priceline said. Revenue jumped 26 percent to $1.3 billion. Analysts on average had projected a profit of $5.27 a share on $1.28 billion in sales.
Priceline declined as much as 4.9 percent in extended trading. The shares rose less than 1 percent to $737.50 at the close in New York, leaving the stock up 19 percent this year.
“The guidance is just them being conservative,” said Edward Woo, an analyst at Ascendiant Capital Group LLC in Irvine, California, who recommends buying the shares. “They had generally OK to positive earnings. I wouldn’t be too concerned, even though the company said there are additional economic headwinds.”
International bookings at Priceline climbed 43 percent to $7.78 billion in the quarter, accounting for 85 percent of total bookings. In addition to Booking.com, Priceline owns Bangkok- based Agoda.com, giving the company access to travelers across Asia.
The company said today its acquisition of hotel-search engine Kayak Software Corp. has cleared regulatory hurdles and will close on May 21, adding profitable search tools to its services that help consumers book flights and hotels online.
Priceline increased first-quarter online advertising spending 45 percent to $403.2 million. The majority of its spending is on Google Inc.’s search engine.
Net income for the first quarter rose 34 percent to $244.3 million, or $4.76 a share, from $182 million, or $3.54, a share, a year earlier.
— Editors: Reed Stevenson, Tom Giles
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