August 7, 2012 / 8:41 PM / 5 years ago

UPDATE 3-Priceline shares fall as outlook trails Street forecast

3 Min Read

* Q2 adjusted EPS $7.85 vs estimate $7.36

* Q3 forecast shy of analysts' estimate

* Europe uncertainty weighs

By Karen Jacobs

Aug 7 (Reuters) - Priceline.com, the online travel agency, topped quarterly profit estimates on Tuesday, but its shares slumped about 15 percent in extended trading as it said weakening conditions in Europe could hurt growth in the current period.

Priceline.com, which competes with Expedia Inc and Orbitz Worldwide Inc, owes much of its success to international bookings on its popular European travel site Booking.com.

But the weakness of the euro against the U.S. dollar has hurt the value of international bookings. The company said more deterioration could come in Europe, which represents 60 percent of its total booked room nights.

"We're assuming fairly significant deceleration in growth rates from here on out, over concern about macroeconomic conditions and our worry that conditions will worsen, particularly in Europe which is such a key market for us," Chief Financial Officer Daniel Finnegan said on a call with analysts.

The company, known for its name-your-own-price auction, said it expects profit excluding the impact of items of $11.10 to $12.10 a share for the current quarter. That compares with $12.76 expected by analysts, according to Thomson Reuters I/B/E/S.

Dan Su, a Morningstar analyst, said bookings growth looked to be light for the third quarter. Priceline.com said third-quarter gross travel bookings should increase about 10 percent to 18 percent, compared with the second quarter's increase of nearly 27 percent.

"Their guidance implies pretty heavy currency headwind," Su said.

She added that increases in international and domestic bookings for the second quarter, of 33.1 percent and 5.3 percent respectively, were at the lower end of forecasts the company had given in May.

"That just shows they are having a more difficult time trying to grow their travel bookings," Su said.

Second quarter net income was $352.3 million, or $6.88 a share, compared with $256.4 million, or $5.02 a share, a year earlier.

Adjusted for items, profit was $7.85 a share in the second quarter, compared with $7.36 expected by analysts.

Quarterly revenue rose 20 percent to $1.3 billion.

The company's shares fell to about $580 in trade after the bell from their Nasdaq close of $679.80 on Tuesday.

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