Free WiFi Hotspot Locator from TechNewsWorldDelta Air Lines (NYSE: DAL) plans to reduce its stake in name-your-own-price e-tailer Priceline.com (Nasdaq: PCLN), although a Priceline spokesman said the planned sale of shares is not significant and does not change the business relationship between the two companies.
Delta reportedly filed with the U.S. Securities and Exchange Commission to sell 5 million Priceline common shares, worth about US$26.3 million.
Priceline spokesman Brian Ek said the shares represent just "a small amount" of Delta's investment in the company. The airline, he said, continues to hold 32 million Priceline shares.
The sale does not change Delta's plans for its ongoing relationship with Priceline, Ek told the E-Commerce Times. In February, the two companies restructured their relationship to reduce Priceline's dividend expenses and help it along the path to profitability. As part of the agreement, Delta exchanged its 6 million Priceline convertible preferred shares for new preferred stock and warrants.
Losses Mount
Delta officials were not immediately available for comment. However, Jim Whitehurst, acting head of eVentures at the airline, was quoted in Thursday's Wall Street Journal as saying the sale does not mean Delta is changing its strategy as far as Priceline.
Delta's Priceline stake reportedly contributed to a $133 million loss for the airline in the first quarter ended March 31st. Delta is a longtime investor in Priceline, which is moving back to its roots in the travel business as the e-tail market falters.
Ups and Downs
Priceline shares were down 22 cents at $5.03 in morning trading Thursday. Over the past year, the shares have traded as high as $51.50 and as low as $1.06. The company went public in March 1999 at $16 per share, with the stock soaring to the $162 level the following month.
Over the past few months, Priceline has been cutting costs and postponing expansion plans as it concentrates on achieving profitability. Expansions into such areas as groceries and gasoline have been shelved.
Priceline built its reputation on its system of allowing consumers to shop for products ranging from travel services to groceries to mortgage services by naming a price for the desired item and seeing which retailer would match it.
Back to Basics
The company's back-to-basics strategy appears to be working. Earlier this month, Priceline beat analyst estimates when it reported a first-quarter loss of 3 cents per share. Priceline has said it is on track to report a pro forma operating profit in the second quarter, as revenue rises 10 to 15 percent over first-quarter levels.
Also this month, Priceline announced a management reshuffling, putting
chairman Richard S. Braddock back in the post of chief executive officer,
replacing Daniel Schulman. Braddock, who remains chairman as well, had been
CEO from July 1998 to May 2000.
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