Recent events at Priceline.com do not necessarily signal its back is on the mat or that it has thrown in the towel, but it is taking a standing-eight count and hoping its knees stop wobbling. Third-quarter financial results, layoffs and stock sales may indicate that a knockout blow is coming.
Priceline told investors its Q3 revenue would be below the anticipated $380 million; revenue was $341 million. The company’s stock has been on a downward slide since March when it hit $80 per share; in early November it was trading for about $3 per share. The company laid off 87 employees (16%); Senior Executive Vice President and COO Heidi Miller and Maryann Keller, head of the auto service business, have stepped down; and several of the company’s top brass have been selling their Priceline stock-Founder Jay Walker dumped 10 million shares since August.
David Provost, senior analyst with Gomez Advisors, says Priceline’s troubles will likely get worse before better. The company has a huge problem with customer satisfaction that needs to be addressed, and that type of problem is not corrected overnight, he says. There could very well be more layoffs, more executives leaving and more declining stock prices. “When internal folks engage in heavy selling, it smacks of people getting their money out while they can,” he says. Priceline’s problems will now be compounded by increased competition from Hotwire.com and Savvio.com, both of which offer similar services, Provost says.
Priceline President and CEO Daniel Schulman said in a prepared statement that the company is pleased that it has shown a positive cash flow for the past two quarters and recognizes its shortcomings in customer satisfaction. “We are working on a comprehensive program to ensure that our customers are satisfied in all respects,” he said, adding that these steps will position the company for profitable growth.
In previous rounds, Priceline took a couple shots on the chin when the Attorney General in its home state of Connecticut began an investigation into more than 100 customer complaints, and when that state’s Better Business Bureau booted Priceline out of the organization. Whether Priceline will be around to hear the final bell will have a lot to do with if it corrects its problems and, if it survives this downward slide, what damage there is to its brand, Provost says.