It looks as if the appetite of American consumers for cut-price travel continues, much to the benefit of Priceline.com.
Bloomberg reports that shares rose to $6.59 at the close of regular trading, reaching $7.58 in after-hours dealing, after some positive results. Also, a Goldman, Sachs & Co. analyst raised his rating and said the worst may be behind the online seller of airline tickets and hotel reservations.
Revenue for the 1st quarter 2001 rose to $269.7 million, an increase of 18% over 4th quarter 2000, with 891,490 new customers added during the 1st quarter, with sequential increases in new customers through each month of the quarter. In total, priceline.com has built a base of nearly 10 million U.S. customers. Repeat business for the 1st quarter 2001 was a record 58%, defined as the number of unique purchase offers coming from repeat customers divided by the number of total unique purchase offers. Repeat and new customer demand accelerated through the 1st quarter 2001. Analyst Anthony Noto changed his rating to ``market outperform`` from ``market perform.``
Priceline.com has put many of the cost and customer service problems behind it, Noto wrote in his report. The company has fired about 35% of its staff since November, reduced office space by almost two-thirds and postponed expansion plans indefinitely to focus on the travel business and making profit.
``Priceline has fixed many of the issues that would have impaired customer satisfaction and profitability, which should benefit the company over the next several quarters,`` Noto wrote.
He expects Priceline.com to have profit in the second quarter profit before costs for restructuring, stock-based compensation and other items. The company is expected to report a first-quarter loss on this basis after the close of regular U.S. trading today.
The Norwalk, Connecticut-based company also is benefiting from an economic environment favoring its discount travel services. Declining demand for air travel, which makes airlines more eager to reach agreements to unload tickets, also has helped Priceline.com, Noto wrote.