CEO: Orbitz Worldwide plans to revive soft U.S. business
Orbitz Worldwide, Inc. (NYSE: OWW) CEO Steven Barnhart said the online travel company plans to revive the softening growth of its domestic business and to continue robust international growth.
“Restoring strong U.S. growth is a top priority for us, but we are focused on rebuilding that growth through innovations in product development and marketing that create new reasons for customers to come directly to our site and to convert at a higher rate on our site, regardless of whether customers self-direct there or come through e-marketing,” Barnhart said.
The chief executive said Orbitz’ approach is going to a slower process than purchasing traffic, but he said he believes it is the best way to drive “sustainable, profitable growth.”
During the fourth quarter, a strong 43% growth in international bookings was offset by a 5% decline in domestic bookings. Going forward, Barnhart said he believes the current softness in the U.S. business will continue into the first quarter of fiscal 2008.
To boost the U.S. business, Barnhart said Orbitz plans to increase the cost efficiency of its online marketing by aggressively pursuing search engine optimization strategies, applying more powerful website analytics and investing in a more effective infrastructure for customer relationship management. All the initiatives should be in place by the summer traveling season, he said.
“We expect that with these initiatives, we will be successful in restoring growth in our U.S. business to our long-term target levels,” Barnhart said.
Before the opening, Orbitz posted a fourth-quarter net loss of $11 million, or $0.13 per share. On an adjusted basis, the firm earned $0.12 per share. During the fourth quarter of 2006, the company recorded a loss of $5 million, or $0.16 per share. Wall Street analysts, on average, projected earnings of $0.12 per share.
“While fourth-quarter profits increased despite slower revenue growth, we expect the current level of softness to have more of an impact on profitability in the first quarter of 2008,” Barnhart said.
Quarterly revenue rose 10% to $197 million, from $179 million during the year-ago period. The revenue results missed analysts’ expectations of $201.2 million in revenue.
“2007 was year of significant achievement for Orbitz as we completed our IPO and successfully launched our global technology platform in the U.K. and Ireland,” Barnhart said.
Barnhart said top-line growth was below the company’s long-term targets. Slow growth that occurred in the third quarter continued into the fourth quarter, he said.
“This softening is specific to the U.S.,” he said. “Growth continues to be strong in the international operations.”
The chief executive said he expects profits during the second, third and fourth quarters to be “well above” profits in the first quarter.
In midday trading, OWW shares are plunging to a near year low — down 17.1%, or $1.13, at $5.48. Over the last 52 weeks, shares have ranged from a high of $15 set on July 20 and a low of $5.78 set on Jan. 22.
