July 6 2006

Do you believe them?

Expedia is in pretty deep kaka

They have to make up a short fall of the Worldspan booking incentive fees. This are running at about $100MM a year so my sources tell me

So why are the analysts not picking up that they cannot replace this net revenue… Well – ignorance is bliss but we know better right?

Here is something from one of the analysts

Expedia (EXPE $14.68 Hold)

Management expects continued top-line softness management in 2Q, and thus the company is not expected to meet the expectation of the first half decline in the high-negative-single-digits for EBITA. That said, management does continue to believe the growth in the back half of the year will be positive, and for the year as a whole, now expects EBITA to decline between 15% and 5%.

Management expects margin comps to improve as the company executes on new initiatives, and particularly into the back half of the year when the company will have easier comps on chain deals that were renewed at less advantageous economics in the second half of 2005. Further, management expects to see some softness in 2Q bookings (due to the World Cup event) but believes there will be a stronger second half in Europe.

For 2Q06, we expect gross bookings of about $4.8 billion with revenues of $572 million. EBITA is expected to be $128 million with EPS of $0.23. We forecast that Expedia will generate $534 million in EBITA in 2006 and $605 million in EBITA in 2007. For 2006, we estimate revenue of $2.3 billion and $0.96 in EPS. We forecast $17.88 billion in gross bookings for full year 2006, or growth of 15% year/year.

Cheers

Timothy

Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
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