Posted on: Tuesday, April 24, 2001
Cheap Tickets profits down 49 percent
Bloomberg News Service
Cheap Tickets Inc.'s first-quarter profit fell 49 percent as the seller of discount airline tickets, car rentals and other travel services increased spending on television and other advertising.
Net income fell to $1.18 million, or 5 cents a share, from $2.31 million, or 10 cents, a year earlier, the company said in a statement distributed by PR Newswire. Revenue rose 17 percent to $24.9 million from $21.2 million.
Honolulu-based Cheap Tickets in December hired J. Walter Thompson advertising agency to help promote its brand and attract more customers to its Internet site, call centers and stores. The company is trying to compete better against larger online travel services, such as Expedia Inc. and Travel-ocity.com Inc.
"The returns aren't all going to come in the immediate quarter," said Legg Mason Wood Walker analyst Thomas Underwood, who rates the shares "market perform." "It's an investment, and the returns will have to come in later quarters."
Cheap Tickets forecast second-quarter earnings will be unchanged from a year earlier, when it earned 21 cents a share. Full-year profit is projected to be 56 cents to 58 cents a share.
Both of the estimates are in line with average forecasts of 22 cents a share in the second quarter and 56 cents for the year by four analysts polled by First Call/Thomson Financial.
The company also said revenue for the second quarter of the year is still forecast to increase 18 percent to 23 percent.
Company officials couldn't immediately be reached for comment.
Cheap Tickets' selling, general and administrative expenses rose to $23.2 million from $17.5 million a year earlier, reflecting the higher advertising spending. Gross bookings, or the value of travel sold, rose 21 percent to $192 million from a year earlier. That was less than the 68 percent growth in gross bookings at Expedia, an Internet travel company controlled by Microsoft Corp., and 65 percent growth at Travelocity.
com.
