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Priceline 1Q net jumps 82%

Dow Jones  May 12, 2009 Inc.'s (PCLN) first-quarter profit jumped 82% on increased bookings, but the online travel-services group warned that the recession and swine-flu outbreak would cast a pall over the sector for the rest of the year.

The company said it continued to gain market share in the first quarter, with increases in airline-ticket sales and hotel and rental-car bookings. Priceline also reported higher margins in the quarter.

The Norwalk, Conn.-based company issued second-quarter guidance that topped analysts' consensus expectations, but the online travel group declined to make projections for the rest of the year.

Chief Executive Jeff Boyd said macroeconomic conditions continue to stifle travel demand and pricing, while the swine-flu outbreak is also expected to impact travelers' plans.

Priceline projected second-quarter earnings of $1.65 to $1.75 a share on an 8% -to-13% increase in revenue. Analysts polled by Thomson Reuters expect $1.65 a share and 5% revenue growth to $542 million.

"Priceline had a blowout quarter and very solid guidance despite a slump in travel demand. Priceline's done impressively well and clearly represents the best growth investment in the travel sector," said Benchmark Company analyst Clayton Moran.

Shares rose 3.4% to $108.46 in midday trading.

Priceline has been stealing share from rivals such as Orbitz Worldwide Inc. ( OWW) and Expedia Inc. (EXPE) due to its discount prices and strong brand awareness. It's "Name Your Own Price" platform allows consumers to bid for tickets at a significant discount, while suppliers can decide how low a price they are willing to accept to fill their inventory.

Priceline led the market by eliminating airline booking fees in 2007 and cutting hotel fees in 2008. Rivals recently followed suit in a bid to capture market share, but Orbitz recently posted a wider loss and Expedia reported a smaller profit in the first quarter.

Boyd noted in a conference call that Priceline expects to see a reduction in its retail airline-ticket market-share gains now that rivals have eliminated fees. But he noted that Priceline's marketing budget was up sharply in the first quarter and he saw no need at this point to ramp it up any further.

The company posted first-quarter earnings of $25 million, or 53 cents a share, up from $13.8 million, or 28 cents a share, a year earlier. Excluding items such as stock-based compensation, earnings rose to $1.09 a share from 76 cents.

Revenue increased 15% to $462.1 million

Analysts expected earnings of 91 cents on revenue of $441 million.

Gross margin edged up to 45.1% from 44.9%.

Gross bookings, or the value of all travel services bought online through Priceline's sites, grew 11% to $1.9 billion, with the U.S. increasing 18%.

Priceline 1Q net jumps 82%
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