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Expedia buys two travel sites, tops estimates

Expedia, the online travel site of Microsoft, said Monday it would buy two online travel companies, VacationSpot.com and Travelscape.com for $177m in stock
Written by Larry Dignan, Contributor on

Expedia also posted a smaller-than-expected loss in its first quarter as a public company.

Under the terms of the deals, Expedia would issue about 2.6 million shares and options, valued at about $82m (£50m), for VacationSpot.com, an online lodging reservation service. Expedia, which went public in November, also said it would issue about 3 million shares, options and warrants, valued at about $95m, for Internet hotel consolidator Travelscape.com.

The combined companies' pro forma revenue was about $69m for 1999 and $27m for the December quarter. Pro forma gross profits were about $14m in 1999 and about $5m in the December quarter. Losses excluding charges were $25m for 1999 and $6m for the December quarter.

In a statement, Expedia said the two deals give it access to 65,000 lodging properties worldwide and a combined run rate of about 2 million room nights per year.

Expedia also topped estimates for its fiscal second quarter. Excluding one-time items, Expedia reported a loss of $5.9m, or 16 cents a share. A First Call consensus estimate of two analysts predicted a loss of 29 cents a share.

Including charges related to stock compensation, Expedia reported a net loss of $23.2m, or 64 cents a share. Stock-based compensation costs were $17.3m.

Revenue rose to $17.8m, up 127 percent from $7.9m a year earlier. Transaction sales, which account for transaction commissions and fees, were $11.9m in the quarter. Gross travel bookings on the Expedia network were $220m, up 158 percent from a year ago.

Expedia went public in November. Microsoft owns 85 percent of Expedia's outstanding shares. Expedia is the first Internet property to be spun off by Microsoft.

Expedia competes with Priceline.com, Preview Travel, which merged with Sabre Holding's Travelocity, and Cheap Tickets among others.

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