Just one week after beleaguered name-your-price e-tailer Priceline.com issued a discouraging third-quarter earnings report and slashed 16 percent of its workforce, the company confirmed reports Wednesday that a high-ranking executive has departed amid questions about the viability of auto sales on the Web.
According to published reports, Maryann Keller, who oversaw Priceline’s automotive services business, left her position along with former chief financial officer Heidi Miller last week. Priceline never formally announced Keller’s departure or the reasons behind it.
Keller reportedly said that Priceline’s experimentation with selling cars online has been a failure. She added that the Internet might never prove to be a viable business model for customers to purchase such big-ticket items.
Two other Priceline executives also left the company last week, according to published reports.
Personnel Shakeup Triggered Resignation
In a continuing bid to trim its operating costs, Priceline said last week that it had cut 87 of its 535 employees. Keller — who joined Priceline in 1999 after serving as an auto analyst at investment research firm ING Barings Furman Selz — was reportedly asked to lay off half of her 23-person staff as part of the restructuring at the Norwalk, Connecticut-based company.
Keller said she handed in her resignation because the firings had significantly narrowed the company’s scope and size.
Some industry analysts say that the loss of such key management figures as Keller and Miller, a highly-regarded finance chief who had come to the company from Citibank, signals that cracks are beginning to emerge in Priceline’s business model.
The newly-confirmed departures are also leaving many investors increasingly skittish. Priceline shares are currently in the throes of a market meltdown, tumbling 24 percent Wednesday to a record 52-week low. Over the past three months, shares in the company have lost over 80 percent of their value.
On top of it all, there appears to be little relief in sight, as the company predicted last week that its revenues will decrease in the fourth quarter.
Difficulty Deepening Niches
Priceline has also had a great deal of difficulty expanding beyond airline sales and driving deeper into other niches.
Last month, its licensee WebHouse Club announced it would wind down its grocery and gasoline operations just as another Priceline licensee, Perfect Yardsale, Inc., ceased operations.
However, Priceline remains committed to its strategy of diversification. In its third-quarter earnings report, the company said its non-air services grew by $10 million (US$), or roughly 20 percent, over second quarter 2000 revenues, and by 255 percent over Q3 1999.