The Most Remarkable Comeback Story In Internet History Is Located In … Norwalk, Connecticut; Priceline Nears Bubble-Era Record on European Bookings

The Most Remarkable Comeback Story In Internet History Is Located In … Norwalk, Connecticut

HENRY BLODGET AUG. 9, 2013, 10:00 AM 14,203 19

Proponents and beneficiaries of the Silicon Valley hype machine will often tell you that what matters is “buzz.” You have to get people talking about your company, this story goes. You have to fake it until you make it. You have to create an aura of invincibility and inevitability. You have to get the press swooning and scrambling for interviews and scoops. You have to make your founders and CEO celebrities. You have to own the conference circuit. You have raise ever-bigger pots of money at ever-more-massive valuations. You have to create the perception that you’re going to be the next world-changing moonshot worth quabillions of dollars…and the reality will follow from that. Nope. You don’t have to do any of that. You just have to put up the numbers. If you’re not convinced, take a look at the company that is without a doubt the most remarkable comeback story in the history of the Internet industry. Way back in the 1990s, this company was the hype machine to end all hype machines. It went public in a massive IPO, and its stock valuation immediately shot up to nearly $50 billion. But then the numbers collapsed. And so did the hype. And so did the stock. And so did the company. A couple of years after the peak of the dot-com boom, the company’s stock had fallen 99%. And the company itself had been left for dead. But then an amazing thing happened. The company found a management team that was less interested in “buzz” and “ideas” and “stories” than it was in actual performance. The company stabilized its business, and then went looking for a new growth engine. And found it. And, now, a decade later, with shockingly little fanfare, the company’s value is about to exceed the level it hit back in the wild dotcom days. The company, in other words, is about to be worth $50 billion again. The company is located, of all places, in… Norwalk, Connecticut. The company is, of course, Priceline. And its CEO, Jeff Boyd, is so press shy that you’ve probably never heard of him. A $50 billion company! In Norwalk, Connecticut! That almost no one ever talks about! If ever you needed proof that, over the long haul, perception is NOT reality, reality is reality, Priceline is it. Congratulations to Jeff Boyd and the rest of the team at Priceline. What a remarkable success story. Priceline Revenue Tops Analyst Estimates on Global Growth

Priceline.com Inc. (PCLN), the largest U.S. online-travel agent by market value, reported second-quarter sales that exceeded analysts’ estimates as international travelers flocked to the service while its main rival struggled.

Second-quarter revenue jumped 27 percent to $1.68 billion from $1.33 billion a year earlier, the Norwalk, Connecticut-based company said today in a statement. Analysts on average had projected sales of $1.66 billion, according to data compiled by Bloomberg.

International bookings surged 44 percent, as Priceline’s Amsterdam-based Booking.com unit expanded even with the European debt crisis entering its fourth year. Priceline’s better-than-expected results come two weeks after Expedia Inc. (EXPE) reported slumping profit, leading to a 27 percent plunge in the stock, the biggest drop in eight years.

“It was an extremely good quarter for Priceline,” said Ron Josey, an analyst at JMP Securities in New York, who has the equivalent of a buy rating on the stock. “The thesis that they took market share has played out.”

Priceline rose as much as 5.5 percent to $984.93 in extended trading. The shares rose less than 1 percent to $933.75 at the close today in New York, and have gained 51 percent this year, compared with Expedia’s 17 percent drop.

Net income at Priceline increased 24 percent to $437.3 million, or $8.39 a share, from $352.4 million, or $6.88 a share, a year earlier, the company said.

Global Expansion

International bookings climbed to $8.6 billion from $6 billion a year earlier, accounting for 85 percent of total bookings. The number of hotel room nights sold rose 38 percent to 69.4 million from 50.2 million. Priceline bought Booking.com in 2005 and Bangkok-based Agoda.com two years later to expand its hotel reservation business across the globe.

Last month, Expedia reported second-quarter profit and revenue that missed analysts’ estimates. The Bellevue, Washington-based company cited weakness in Southern Europe and reduced traffic from TripAdvisor Inc. (TRIP)’s site.

Meanwhile, Orbitz Worldwide Inc. (OWW), another online agent, has rallied in the past year and got a further boost today after forecasting 2013 sales that exceeded analysts’ estimates. The stock jumped 37 percent to $12.62, a six-year high.

Priceline’s revenue in the third quarter will increase 23 percent to 30 percent, the company said. Analysts on average expect sales to rise 29 percent to $2.2 billion, according to data compiled by Bloomberg.

To diversify its business, Priceline acquired travel search engine Kayak Software Corp. for $1.8 billion in a deal that closed in May. Expedia is also competing in that market after buying a $630 million majority stake in Germany’s Trivago earlier this year.

To contact the reporter on this story: Callie Bost in New York at cbost2@bloomberg.net