Priceline CEO Seeks Growth After Boyd’s ‘Hundred Bagger’

Priceline CEO Seeks Growth After Boyd’s ‘Hundred Bagger’

Darren Huston has a tall task at Inc. (PCLN), succeeding the guy who generated a 100-fold stock surge over the past 11 years, racing the company past Expedia Inc. (EXPE) Huston, 47, was named chief executive officer yesterday of the Norwalk, Connecticut-based company, replacing Jeffery Boyd, who is staying on as chairman. Huston, a former Microsoft executive, joined Priceline in 2011 as head of, the European unit that’s fueled the company’s expansion.Now that Boyd has established Priceline as the top site for booking hotels in Europe and built a growing presence in Asia through the purchase of, Huston is left to squeeze growth out of a more mature market. Priceline started running promotions early this year in the U.S. to build the unit’s brand, and in May the company acquired Kayak Software Corp. for about $1.8 billion to capture revenue in hotel search.

Boyd “had the foresight to make some of these international acquisitions that have really driven the growth of the company,” said Aaron Kessler, an analyst at Raymond James & Associates Inc., who has the equivalent of a buy rating on the stock. “The business has continued to grow at strong rates and continued to gain significant market share.”

Boyd, 57, has been CEO of Priceline since 2002, overseeing a surge in sales and profit and helping bolster the stock from about $10 to more than $1,000. He moved the company from a U.S. site for reserving flights and some other offerings to the dominant service for booking hotels, the most profitable side of online travel.

Unprecedented Gains

On yesterday’s conference call, Mark Mahaney, an analyst at RBC Capital Markets, congratulated Boyd on the “hundred bagger” and said “I don’t think I’ve seen that before and may not see that again.”

Huston will become CEO and a board member Jan. 1. He previously spent eight years at Microsoft, serving in several roles including head of the Japan business, and before that he was an executive at Starbucks Corp. (SBUX)

The new CEO has some challenges ahead. While the company reported third-quarter sales that topped analysts’ estimates, it provided a fourth-quarter earnings forecast that trailed projections. Huston suggested on yesterday’s call that he’ll be continuing to lean on Boyd.

“In the coming months, my focus will be to work with Jeff, the brand CEOs, and group leadership to make sure we stay the course on the execution of our business strategy,” Huston said. He wasn’t available for an interview.

Over $1,000

The stock fell as much as 7.6 percent in extended trading to $945.19 before recouping most of those gains. As of yesterday’s close, the shares had jumped 65 percent this year to $1022.89, while Expedia dropped 4.1 percent.

Boyd said on the call that as Priceline expands in Asia, sales there won’t increase as quickly as they have been in Europe, because there’s less Internet penetration. International bookings, which account for 85 percent of the business, increased 42 percent in the third quarter, slowing from 44 percent in the second quarter.

Priceline’s online advertising costs jumped 42 percent to $533.2 million, while offline advertising more than tripled to $40 million as the company promoted in the U.S. The company said on the call that these investments will lead to “pressure on margins” in the current quarter.

Profit, excluding some items, will be $7.80 to $8.30 a share in the fourth quarter, trailing the $8.34 average analyst projection, according to data compiled by Bloomberg.

“We’re seeing slight weakening in their economic profit,” said Craig Sterling, an analyst at EVA Dimensions in New York. “When we start to see little cracks, it’s usually not a good sign.”

To contact the reporter on this story: Ari Levy in San Francisco at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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