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Priceline clambers on the profitability bandwagon

But can it hang on in there?
Written by silicon.com staff, Contributor

But can it hang on in there?

It could be a sign of the times that Priceline's profit today failed to garner the same triumphant fanfare that greeted Amazon.com last month on the occasion of its debut profit. For six years Amazon had been trying to grasp the dot-com holy grail. Its business model was praised by analysts. International expansion was hailed as a success. Amazon was positioned as a role model for up and coming dot-com companies. There was just one last important financial and psychological barrier to clear - profitability. And finally, two weeks ago it claimed its glory. But Priceline has already been there, done that and bought the t-shirt (for which it presumably 'named its own price'). In August, when Amazon was still wallowing in the red, Priceline posted its first ever profit - $2.8m on revenue of $385m. Today, the company beat analysts' expectations again, posting a fourth quarter profit of $3.3m on revenue of $235.3m. Analysts had been forecasting a break even result. Following Amazon's profit, the dot-com pundits gloated that 2002 would be the year when online business proved its viability. But Priceline was already one profitable quarter ahead of Amazon at that stage, and eBay had beaten them all hands down posting its thirteenth consecutive profitable quarter earlier this month. eBay posted a net profit of $25.9m compared with Amazon's net profit of $5m. But after 13 quarters profit can become a bit predictable. It might clash with popular media opinion, but all three companies, although at varying stages of profitability, only serve to prove that dot-coms are not quite necessarily in the clear. Amazon.com - well aware that its fourth quarter profit stemmed mainly from the Christmas shopping frenzy, warned it could be in the red again in the next quarter. Likewise Priceline, possibly also benefiting from the Christmas spending season, has warned that the next quarter could bring bad news. In the best case scenario Priceline expects to meet the lower end of analysts' expectations, in the worst case it will miss them completely.
eBay may continue to make a profit, but analysts are beginning to question for how much longer. Most of the company's growth has been in the US, a market that is reaching saturation point. While eBay has launched in Europe, its success outside of the US has been a bit touch and go. Like Amazon, eBay's operations in Germany and the UK are doing well. In Japan and France the case is quite different. There is no arguing that the dot-com industry has turned a corner. Priceline, eBay and Amazon at the moment are a profitable troika basking in the dot-com good books. But there are no indications that the road ahead will hold the same good fortune.
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