Online travel site Preview Travel reported a third-quarter loss that bettered Wall Street's expectations and also announced it will spin off its television operation, making it a pure Internet player.
Preview Travel reported a net loss of $4.8 million--$0.35 per share--compared with a net loss of $2.5 million--$1.44 a share--for the like quarter a year ago, before it went public in November.
Analysts had predicted that Preview would lose $.40 per share, according to First Call. Last quarter, Preview Travel reported a net loss of $5 million, or $.39 per share.
While the company reported net losses, it also reported increased revenues of $5.6 million, up 39 percent over its revenue of $3.4 million for the same period last year.
Preview Travel is anticipating reaching profitability in the third quarter of the year 2000, said Ken Pelowski, the company's executive vice president and chief financial officer.
Also today, the company announced it will spin off its TV broadcast division to a group of employees and investors. It expects a one-time charge of $4 to $5 million related to the sale of its TV assets.
Investors will name the new spin-off NewsNet Central, and plan to produce and/or distribute branded programming for several companies, including Preview Travel, Intuit, HealthCentral, and CNET, which is the publisher of CNET News.com.
Pelowski said the sale will allow Preview Travel to focus on what has become its core business: its online travel site.
But he also pointed out that Preview will continue to have access to the 6,000 hours of video footage produced by its television unit, and plans to use that footage on its site. That will be increasingly important as more and more Net users get access to broadband services and will be able to take advantage of video.
Preview Travel, incorporated March 1985, began as a television production company. In January 1995 it first launched online at America Online, at the urging of Preview board member and AOL executive Ted Leonsis, according to Pelowski and SEC filings.
The company launched on the Web 11 months later, in December of 1995.
As the online site flourished, it started diverging from the production company, which has shows that go beyond travel-related programming. Today the company distributes in-flight programming for Northwest Airlines; HealthCentral with Dr. Dean Edell; Jack Hanna's Animal Tales, and CNET Tech. It also produces and syndicates a weekly half-hour travel news magazine called Travel Update, which is sponsored by Preview Travel.
Pelowski said the spin off "will likely help Preview. It will clearly help the financials of Preview Travel going forward."
Revenues from television fell to $1.65 million from $1.85 million the year before. Online revenues, on the other hand, more than doubled to $4 million this year from $1.6 million last year.
Preview decided to spin off the television unit because "our desire was to focus on the travel area," Pelowski said.