By Nora Macaluso E-Commerce Times
09/21/01 10:39 AM PT
Priceline is one of many Internet companies that have
been buying back their own shares in an effort to show
confidence and bolster values.
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In a vote of confidence for his company,
Priceline.com (Nasdaq: PCLN) chairman and chief
executive officer Richard Braddock said Friday that he had ended a plan to sell some
Priceline shares over the next year, and instead will exercise options to buy 750,000
shares.
Braddock's move follows a similar announcement from key Priceline shareholders. Thursday,
Priceline announced that Asian investors Cheung Kong (Holdings) and Hutchison Whampoa had
said they withdrew a regulatory filing that would have enabled them to sell shares in the
company, and instead decided to raise their stakes.
Priceline said that its directors approved requests that would allow Cheung Kong and
Hutchison to buy shares increasing their ownership of the Norwalk, Connecticut-based
e-tailer to a combined 37.5 percent, up from 27 percent.
Shares, Revenue Fall
Priceline shares, which have dropped over the past year, have taken a huge hit since the
September 11th terrorist attacks on the United States.
Priceline closed at US$2.29 Thursday, down from a 52-week high of $27. In early trading
Friday, the shares continued their decline, losing 21 cents to $2.08 in the first few
minutes. However, the shares had crept into positive territory for the day by 11 a.m.
EDT, reaching $2.33.
Earlier this week, Priceline warned that the attacks
would cut into revenue for the quarter ending September 30th, as customers cut back on
travel and cancelled existing reservations. The company said it expects revenue for the
quarter to total $280 million to $300 million -- $245 million of which was recorded in
July and August.
'Ready and Able'
In August, Braddock said he would sell Priceline shares over a 12-month
period and use the proceeds for estate-planning purposes.
"I am confident that Priceline.com is ready and able to weather the current
slowdown in travel, and will emerge a winner in the e-commerce space over
the long run," said Braddock, who works without a salary.
Troubles Widespread
Technology and travel stocks have been among the hardest hit sectors
following last week's attacks. As a result, many companies have been buying back their own
shares in an effort to show confidence and bolster values.
Internet travel rivals Travelocity (Nasdaq: TVLY) and Expedia (Nasdaq: EXPE) have
also said the attacks would hurt results, though those companies also
expressed confidence that they would weather any downturn.
Turnaround Story
Priceline, meanwhile, had been in the process of a turnaround, recovering from
failed forays into businesses ranging from groceries to gasoline, and
weathering bad publicity and reports of a state attorney general's
investigation in Connecticut. At the end of the second quarter, the company
had $165.7 million in cash and no debt.
The company, which rose to fame by allowing consumers to name the prices they would pay
for various goods and services, has exited its unprofitable businesses in order to focus
on travel.
"Our turnaround activities over the past few quarters made us both profitable and
cash-flow positive last quarter," Braddock said Tuesday.
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