UPDATE 3-Orbitz, Priceline shares dive on weaker outlooks

Wed Aug 8, 2012 1:21pm EDT

* Orbitz Q2 EPS 4 cents a share
    * Europe worries cited
    * Analyst says Priceline shifting to more mature growth


    Aug 8 (Reuters) - Shares of Orbitz Worldwide Inc and
Priceline.com slumped on Wednesday after the online travel
agencies said a weakening global economy would hurt their
growth.
    Priceline.com, with the largest market
capitalization in the sector, was down 16 percent while Orbitz
fell 24 percent to be the percentage loss leader on the New York
Stock Exchange.
    Orbitz cut its full-year growth forecast on Wednesday, a day
after  Priceline said weakness in Europe could hurt results in
the current quarter. Shares of Expedia,
another rival, fell more than 5 percent.
    Daniel Kurnos, an analyst with Benchmark Co, cited near-term
pressure for the online travel agencies, whose results reflect
the outlook for leisure travel. But he said were still plenty of
growth opportunities as they expand to new geographies.
    Online travel companies "are going to experience increasing
or incremental weakness for at least the next quarter if not
into the fourth quarter," Kurnos said.
    Orbitz, which also owns the CheapTickets and ebookers travel
sites, said its revised outlook reflects worse conditions in
Europe, weaker online air travel demand and foreign-exchange
challenges.
    Priceline.com, which owes much of its success to
international bookings on its European travel site Booking.com,
said on Tuesday it expected Europe could deteriorate.
    Stifel Nicolaus cut its rating on Priceline.com, long a star
in the online travel sector and a favorite among investors, to
"hold" from "buy," saying it was transitioning to slower growth.
    "We believe Priceline shares should be held as part of
growth portfolios, but investors should expect a more mature
company growing at a slower pace," Stifel analyst George Askew
said in a note to clients on Wednesday.
    Orbitz said transactions tied to U.S. air travel fell in the
second quarter, offsetting growth in transactions for hotel and
vacation packages. Its net income was $4.6 million, or 4 cents a
diluted share, in the second quarter, down from $8.9 million, or
8 cents a share, a year earlier.
    Analysts expected Orbitz profit of 5 cents a share,
according to Thomson Reuters I/B/E/S.
    Orbitz said the total value of the company's travel bookings
fell 1 percent to $2.97 billion in the second quarter, hurt by
currency effects.
    Quarterly revenue was flat at about $201 million, compared
with $207.8 million expected by analysts.
    Orbitz said it now expects revenue to rise 2 percent to 4
percent for the full year, compared with a May view of growth
between 4 percent and 8 percent.  It also pared its growth
forecast for adjusted earnings before interest, taxes,
depreciation and amortization. Orbitz said it now expects
adjusted EBITDA for the year to be flat to up 5 percent; in May
it had called for a 7 to 12 percent increase.
    Orbitz shares were down 24 percent to $3.53 in afternoon
trading as Priceline.com fell 16 percent to $569.56. Expedia
shed about 5.5 percent to $55.64.
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