Archive for Thursday, September 28, 2000

E-commerce shares swoon

Priceline.com falls 42 percent Wednesday

September 28, 2000

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Shares of Priceline.com plummeted 42 percent Wednesday, dragging other online commerce stocks down, after the Internet bidding site said third-quarter revenues would fall short of its own estimates.

Priceline's drop triggered declines of 5 percent to 12 percent in other online commerce sites including Yahoo, eBay, and Amazon.com as investors feared those companies also would post lower third-quarter revenues. Travelocity.com dropped 17 percent to $12.

Priceline said it was hurt primarily by a decrease in airline ticket purchases on the site, and that advertising featuring actor and Priceline investor William Shatner Capt. Kirk from "Star Trek" failed to rescue lagging sales.

"We expected September would be the strongest sales month of the quarter, but it now appears September will be weaker than both July and August," Priceline Chief Executive Dan Schulman said Wednesday.

Wednesday's decline was the latest drop in a steady slide since March for shares of travel Web sites; Priceline shares are down more than 90 percent from their high in March of $104.25.

The reason for the declines: Investors fear such sites will be hurt by two new sites, Orbitz and Hotwire, that are backed by major airlines. Hotwire recently started its site, and Orbitz is expected to be online next year.

Priceline said Wednesday that it expected to post third-quarter revenues of $340 million to $345 million. That would compare to the company's previous estimates of $360 million to $380 million.

Priceline lets consumers name their own price on a range of products, including airline tickets, hotels, car rentals, groceries and gasoline. The service either accepts or rejects customers' bids.

Nonairline revenues will increase 20 percent compared with the second quarter, Priceline said. But airline ticket sales will be about $20 million to $25 million below the second quarter's numbers.

Priceline attributed the drop in airline ticket sales to factors such as the effect of rising fuel prices on ticket sales; numerous flight cancellations during the summer; and fare sales that the airlines launched.

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