Orbitz, Priceline shares hit by weaker outlook
(Reuters) - Online travel agency Orbitz Worldwide Inc (OWW.N) reported a lower second quarter profit on Wednesday and cut its full-year growth forecast on global economic uncertainty, and its shares shed 20 percent.
Shares of Priceline.com (PCLN.O), which also said weakness in Europe could hurt its growth in the current quarter when it posted results late Tuesday, were down 14.6 percent. Expedia (EXPE.O), another rival, was down nearly 4 percent.
"Clearly there's going to be nearterm pressure," said Daniel L. Kurnos, an analyst with Benchmark Company. Online travel companies "are going to experience increasing or incremental weakness for at least the next quarter if not into the fourth quarter."
But he said there was still plenty of growth opportunities for the online travel agencies as they expand to new geographies.
Orbitz, which also owns the CheapTickets and ebookers travel sites, said its revised outlook reflects worsening economic 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 conditions in Europe could worsen.
Orbitz said net income came to $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.
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. Hotel and vacation package revenue rose but revenue tied to air travel fell.
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 20.1 percent to $3.70 in morning trading as Priceline.com fell 15 percent to $578.54. Expedia shed about 4 percent to $56.57.
(Reporting by Karen Jacobs; Editing by Gerald E. McCormick and Sofina Mirza-Reid)
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