Online travel company Expedia Inc. (EXPE) is scheduled to announce third-quarter results before the market opens on Thursday. On average, 18 analysts polled by Thomson Reuters expect the company to earn $0.43 per share for the quarter, while quarterly revenues are estimated to be $828.88 million. Analysts' estimates typically exclude special items.
The Bellevue, Washington-based company provides travel products and services to leisure and corporate travelers, offline retail travel agents, and travel service providers. The company's portfolio of brands include Expedia.com, hotels.com, Hotwire.com and the TripAdvisor Media Network.
The tough economy has been hurting both business and leisure travel for the past few quarters. In late May, Expedia.com eliminated online air booking fees, as well as change and cancel fees on all hotel, car rental and cruise reservations and on virtually all flight reservations. The move was aimed at increasing the business volume.
When the world's No. 1 online travel agency releases results today, it is likely to throw some light on whether the signs of recovery in the economy are real and stable, and whether its strategies to lure customers have paid off.
In July, the company said second-quarter net income attributable to Expedia dropped to $40.9 million or $0.14 per share from $96.09 million or $0.33 per share in the year-earlier quarter. Revenue for the quarter was $769.77 million, down 3% from $795.05 million last year.
In the second quarter, the company reserved $19 million related to a settlement of claims alleged in a consumer class action lawsuit filed in Seattle, Washington. Final approval of the settlement is anticipated by the end of 2009. The company said it was settling the case to avoid costly and time-consuming litigation.
Later, in a conference call, Dara Khosrowshahi, President & CEO of the company, said that although the economic environment remains uncertain, the trends witnessed in the second quarter and into July are promising. The company also said that the payments relating to the San Francisco occupancy tax assessments that it accrued for in the second quarter would hurt free cash flow in the third quarter.
Credit Suisse last week raised its 2009 estimates and target price for Expedia. The brokerage expects 2009 earnings per share of $1.37, compared to the consensus $1.27, and target price was raised to $29 from $21. The firm said the company's unit volume growth is benefiting from secular drivers, enhanced inventory access/promo pricing and consumer value emphasis. It added that profitability is improving, despite lower unit pricing/fees owing to enhanced marketing/operating efficiencies, favorable mix shift and cost takeout.
Among peers, Priceline.com (PCLN) is slated to announce third-quarter results on November 9. Analysts expect earnings of $2.88 per share on revenues of $690.18 million.
EXPE closed Wednesday's regular trade at $24.34, down $0.90 or 3.77%, on 8.48 million shares. In the extended trade, the stock dropped 3.53%.
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