By Keith Regan E-Commerce Times
04/19/01 6:15 PM PT
Travelocity CEO Terrell B. Jones said reaching the company's
fifth anniversary earlier this month was 'a major milestone for an Internet company.'
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Online travel
site Travelocity.com
(Nasdaq: TVLY) reported its first-ever profitable quarter
Wednesday, just days after competitor
Expedia.com
(Nasdaq: EXPE) said it has reached profits as well.
Travelocity reported an operating profit of
US$618,000, or 3 cents per share, on revenue
of $72.9 million before several one-time charges.
In the same quarter a year ago, the Fort Worth,
Texas firm lost $5.6 million on $35 million in revenue.
"Our results prove that the concept of booking
travel on the Internet works," Travelocity chief executive officer Terrell B. Jones said.
Travelocity also marked its
fifth anniversary earlier this month, which Jones
called "a major milestone for an Internet company."
Jones said the company made the profits a quarter ahead of schedule.
"Despite economic pressures, we are projecting
modest growth during the remaining three
quarters of the year," Travelocity chief financial officer Ramesh Punwani said.
Momentum Builds
Travelocity's profit news adds to the momentum
for the online travel industry, one of the best
performing sectors of e-commerce in recent quarters.
On Monday, Bellevue, Washington-based
Expedia said it earned
US$4 million, or 9 cents per share, on revenue of $110
million for the quarter, a figure that also excludes
special one-time charges.
Richard Barton, chief executive officer of Expedia,
said his company's profits validate its business model.
Orbitz Looms
Despite the good earnings reports, analysts say that
a host of questions remain to be answered about
the online travel industry, including whether the
profits can be sustained long-term and during
slower travel seasons.
Given the imminent arrival of airline-backed
Orbitz.com, which was cleared for launch
by the U.S. Department of Transportation last week
and now awaits Department of Justice clearance, the
long-range outlook is cloudy.
In fact, a recent report indicated that more online travel
shoppers are visiting airline-owned Web sites already,
a trend many expect to accelerate once Orbitz arrives.
"New competitive pressures will prove to
be a problem," said Morningstar.com analyst
Langdon Healy. "Because of the special relationship
Orbitz has with the airlines, it likely will be
able to offer its customers more than sites
like Expedia and Travelocity."
What About Priceline?
The profit parade also awaits Priceline.com (Nasdaq: PCLN), which has said
that it may report an operating profit in the second quarter of its fiscal year.
Priceline is slated to announce its first-quarter
earnings on May 1st and has said it expects a loss
of 5 to 7 cents per share.
U.S. Sues Three Data-Mining Tech Firms April 19, 2001
The FTC alleged that the data-mining firms violated a federal law
known as the Gramm-Leach-Bliley Act, which prohibits the use of false
statements to collect sensitive consumer data.
Related Stories
Expedia Gains on Profit Outlook April 16, 2001
Expedia said that revenue from merchant business nearly
doubled from a year earlier, to about
$67 million, while agency revenue grew about 88 percent to $34 million.
Orbitz Cleared for Takeoff April 16, 2001
The Department of Transportation concluded that because Orbitz would obtain its
airfares from sources already used in the market, there was a reduced risk of
collusion by the airlines operating the site.
Report: Web Travel Traffic Gliding to Airline Sites April 04, 2001
Over the past 12 months, visits to United Airlines' Web site jumped
40 percent and traffic to American Airlines' site improved 126 percent,
while Priceline and Travelocity saw decreased traffic.
Priceline Gains as Targets Reaffirmed April 02, 2001
'We credit the recovery of our business momentum, in large part, to the numerous improvements we've made in our products and in our customer service,' Priceline president and chief executive officer Daniel H. Schulman said.
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