Expedia profit down less than expected

CHICAGO (Reuters) - Expedia Inc (EXPE.O) posted a better-than-expected profit, sending shares up 20 percent on hopes that the worst may be behind the battered travel industry.

Although the online travel agency beat Wall Street's expectations, its profit still fell 23 percent and the total value of the company's bookings dropped 11 percent decline.

But they also reflect the beginnings of stabilization for an industry battered by economic recession and weakened travel demand, one analyst said.

"We can extrapolate from Expedia's results that industry gross bookings may have begun to slow their rate of decline," said Morningstar analyst Warren Miller.

"However, since most of Expedia's operating income growth came from cost-cutting, it's hard to know how that will translate into the results of other companies in the industry," Miller said.

He noted that the impact of the swine flu outbreak on travel demand is unknown and "may have already affected the consumer mind-set enough to impact next quarter's results."

Expedia shares were up 23 percent at $13.04 in early trade on Nasdaq.

Online travel agencies like Expedia, Priceline.com (PCLN.O) and Orbitz Worldwide (OWW.N) have struggled this year to bolster bookings while a sour economy dents travel demand. Efforts to stimulate travel include sales and fee waivers.

Net profit amounted to $39.4 million, or 14 cents per share, compared with $51.3 million, or 17 cents per share, a year earlier.

Excluding one-time items, it earned 21 cents per share. Wall Street had expected the company to earn 15 cents per share on that basis, according to Reuters Estimates.

The company linked the decline to a decrease in interest income and an increase in interest expense.

Expedia said its total bookings amounted to $5.23 billion, a decline of 11 percent from a year ago. Domestic bookings decreased 11 percent, while international bookings decreased 13 percent.

(Reporting by Kyle Peterson, editing by Dave Zimmerman and Derek Caney)