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Priceline sees profits ahead

UPDATE Priceline.com posted a $6.2 million loss in its first quarter today, but said it sees better-than-expected profits in the second and third quarters.

"We still believe we are in a turnaround mode and we are managing the company accordingly," CEO Daniel Schulman said Tuesday, during a conference call with analysts. "That said, we are encouraged by our financial results and our customer momentum in the first quarter."

After market close Tuesday, the online seller known for its "name your own price" system reported a first-quarter loss of $6.2 million, or 3 cents per share. First Call's survey of 11 analysts predicted a loss of 5 cents per share for the company's first quarter ended March 31.

Priceline.com (Nasdaq: PCLN) said it also expects to beat First Call's current consensus projections in the second and third quarters. Priceline.com Chief Financial Officer Bob Mylod told analysts to expect earnings of 1 cent to 2 cents per share on second-quarter revenue of $297 million to $310 million, and 2 cents to 3 cents on third-quarter revenue of $320 million to $330 million.

First Call was calling for break-even results in Priceline.com's second quarter, on revenue of $317.3 million, and a profit of a penny per share on third-quarter revenue of $323.5 million.

Shares of Priceline.com traded at $7.32 in after-hours activity on the Island ECN, following the conference call. They rose $1.74 to $6.59 in Tuesday's regular trading ahead of the news.

Company executives declined to provide a full-year forecast. "We still remain very much in a turnaround mode in terms of winning back customer confidence and customer traffic," Mylod said. "As a result, we are going to limit our earnings guidance to quarters two and three in 2001."

Priceline.com's turnaround is proceeding as scheduled, but the company is being careful with its forecasts, said Michael Legg, analyst with Jefferies & Co. Many publicly traded companies intentionally keep their formal earnings projections low enough to be easily surpassed.

"The company is being conservative in their guidance, given the limited visibility," Legg said. "I think it's the safe thing for them to do."

Priceline.com doesn't expect to start boosting revenue on a year-over-year basis until the end of the third quarter, Mylod said.

First-quarter revenue increased 18 percent sequentially to $269.7 million, as Priceline.com concentrated on its original business of travel services. The company added more than 891,000 customers during the quarter.

Earlier Tuesday, shares of Priceline.com shot higher after Goldman Sachs upgraded the stock.>