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The Honolulu Advertiser
Posted on: Tuesday, December 10, 2002

Priceline chairman goes against own advice

By Miles Weiss
Bloomberg News Service

WASHINGTON — Priceline.com Inc. Chairman Richard Braddock cut his stake in the travel discounter four months after telling investors that buying back its own stock was the company's "best investment" available.

Braddock, who stepped down as Priceline.com's co-chief executive officer in late November, sold 750,000 company shares the next week at an average price of $1.80 each, according to regulatory filings with the Securities and Exchange Commission. It was Braddock's largest sale at Priceline.com and the first time he sold company stock for less than $25 a share.

The stock sales come as Priceline.com's business model — letting customers say how much they'll pay for airline tickets, hotel rooms and rental cars — has lost some luster with consumers. With airlines cutting prices and other online travel agencies, such as Expedia Inc., offering discounts, travelers have less incentive to bid for prices, analysts say.

"Airline tickets are so cheap that you don't need to go name your own price," said Thomas Underwood, a former Priceline.com official who provides research on the company as an analyst at Legg Mason Wood Walker Inc.

Faced with stiffer competition, Priceline.com has seen its shares plunge from an all-time high of $165 in 1999. In July, with company shares trading below $2 each, Priceline.com's board authorized the company to repurchase $40 million of stock, an initiative backed by Braddock.

"At the current valuation, we believe that the best investment Priceline.com can make is in our own company," Braddock said in July.

Priceline.com bought back 5.4 million shares for $12 million between late July and the end of September, according to a quarterly filing with the SEC.

Braddock didn't return telephone calls seeking comment about his sale of the 750,000 shares. Brian Ek, a Priceline.com spokesman, said Braddock sold the shares for "estate planning purposes."

Nancy Peretsman, a Priceline.com director, said the sale comprised a small portion of the 12 million shares Braddock owned.