Priceline.com to Cut Jobs; CFO Resigns
Priceline.com said Thursday that it’s cutting 16% of its work force and that its chief financial officer, Heidi G. Miller, is leaving just eight months after joining the company from banking giant Citigroup.
Priceline.com, the Internet-based, name-your-own-price system for travel tickets and other services, made the announcements in conjunction with its third-quarter earnings report, in which it reported a loss that met lowered analyst expectations.
But the firm also said October ticket revenue was down 20% from September.
After closing at $6.84, up 66 cents, in regular trading on Nasdaq, shares of Priceline fell as much as $1.84, or 27% to $5.19 in after-hours trading on the news.
Priceline said it is laying off 87 people from its 535-member work force. The layoffs and other changes would result in a fourth-quarter charge of about $9 million.
The company said Miller was leaving to “pursue opportunities and apply her talents in a more established business environment.” Bob Mylod, the senior vice president of finance, will replace her.
Priceline reported a loss of $2 million, or 1 cent a share, for the third quarter, compared with a loss of $12 million, or 8 cents, in the same quarter last year. The results exclude option payroll taxes, a write-off of a $189-million warrant for the company’s WebHouse Club licensee, and preferred stock dividends.
Revenue more than tripled to $341 million from $152 million. Before reducing expectations, analysts had expected revenue of about $360 million to $380 million.
Priceline, known for its ads featuring actor William Shatner, of “Star Trek” fame, warned last month that it expected to report the loss, contrary to analyst expectations for a break-even quarter, saying it was struggling with tough competition from airlines.
Priceline said it was revamping its compensation program for remaining employees, mostly through stock options.
The company said there will be an as-yet undetermined charge against fourth-quarter earnings to cover costs of the layoffs and the compensation plan. The firm also expects to take a $9-million noncash charge to cover the costs of amended warrants held by Delta Air Lines.
“While we are disappointed in our airline ticket sales revenue for third quarter, we believe that the business made solid progress on several fronts,” Schulman said Thursday. “Our total customer base grew to 8 million. Repeat usage also grew, with slightly more than half of all purchase offers coming from repeat customers.”
Schulman said the company was beginning several initiatives to improve customer satisfaction including changes to its Web site and “educational initiatives” to demonstrate the value of the service.
Priceline, which started out two years ago offering name-your-own price airline tickets, expanded into other areas, including rental cars, home mortgages, telecommunications services, gas and groceries.
The company’s name-your-price business model was initially hailed by analysts as an ingenious use of the Internet that could revolutionize retail pricing.
