Expedia profit beats post-Sept. 11 estimates

SEATTLE (Reuters) -- Expedia Inc. on Monday posted quarterly earnings that beat expectations in the wake of the Sept.

SEATTLE (Reuters) -- Expedia Inc. on Monday posted quarterly earnings that beat expectations in the wake of the Sept. 11 attacks as the online travel company saw bookings largely recover after a sharp initial drop.

But the Bellevue, Washington-based company, saying some of the impact of the attacks would be felt in the current quarter, lowered its full fiscal year profit estimate by about 20 percent to $40 million, with revenues of about $310 million.

"The full force of the September events will be felt in the current quarter," Chief Executive Rich Barton told analysts and reporters on a conference call.

For its current, second fiscal quarter, Expedia said agency revenues, basically booking fees from airlines, would be $25 million while merchant revenues, from more lucrative custom travel packages put together by Expedia, would be about $35 million.

Advertising and licensing revenues, which have been steadily shrinking as a proportion of overall revenues, would be flat to slightly down in the quarter, at around $5 million.

"Actually (online travel firms) have all reported very good results despite the attacks of Sept. 11. All the companies, however, look like they will see impact to prior plans for the quarter we're in," Legg Mason analyst Thomas Underwood said.

Shares rise
Expedia, which celebrated its 5th anniversary on Monday, said for its first quarter ended Sept. 30 it turned a net operating profit of $15.1 million, or 24 cents a share, compared with a loss of $1.6 million, or 4 cents a share a year earlier.

"Congratulations really are in order for managing through a difficult quarter," Goldman Sachs & Co. analyst Anthony Noto told management on the conference call.

Expedia was expected to earn from 6 cents to 20 cents a share, with a consensus estimate of 14 cents a share, according to analysts polled by Wall Street tracking firm Thomson Financial/First Call.

Last quarter, Expedia guided investors to expect per share earnings of 16 to 19 cents.

Shares in Expedia rose nearly 7 percent to $31.20 in after-hours trading, after falling 2 percent in regular Nasdaq trade to $29.23.

"The strengths of our product and of our business model, particularly the expansion of our hotel and package-focused merchant business, have helped us weather the storm experienced by the travel industry since the terrible events of September 11," Barton said in a statement.

'Travel is different now'
Including costs like a $6.3 million charge related to a deal in which USA Networks Inc. will buy up to a 75 percent stake in Expedia from Microsoft Corp., Expedia's net loss was $4.7 million, or 9 cents a share, compared to a net loss of $30.8 million, or 69 cents a year earlier.

Revenues for the quarter were $79.5 million, compared to $42.1 million a year earlier. First Call said only a single analyst had ventured a revenue estimate, of about $80 million.

Agency revenue nearly doubled, to $39.3 million while merchant revenue nearly tripled to $34.1 million, from $12.3 million a year earlier.

Ad and licensing revenue fell about 25 percent, to $6.1 million from $8.1 million.

Gross travel bookings for the quarter rose to $723 million, a 55-percent climb over a year earlier, but down 10 percent from the previous quarter due to the attacks, Expedia said.

"We haven't seen a big change in the mix of business versus leisure or what have you," Barton told Reuters in an interview. "What we've seen a change in is how much time people are taking to make their plans and how much information they want about the travel process itself. Travel is different now. It feels new again and people want to know what to expect."