Priceline.com Inc (NASDAQ:PCLN) operates as an online travel company. Priceline is also one of few survivors from the dot.com good old days. As opposed to most of the other dot.com companies that disappeared from the face of the universe when the dot.com bubble popped, Priceline is still alive and has a vibrant business. The company is considered the largest U.S. online travel agent by market value.
Priceline.com Inc (NASDAQ:PCLN)’s fundamentals are solid, with the company demonstrating robust revenue growth, decent debt levels, impressive earning growth and expanding profit margins. The company’s valuations are certainly expensive, as its stock has recently hit a new all-time high. Having said that, I think that the company is a solid buy given its potential to penetrate into lucrative international markets as the investment will certainly pay off in the near future.
Acquisition of Kayak Software
Last year, Priceline.com Inc (NASDAQ:PCLN) announced that it agreed to acquire the travel search engine Kayak Software Corp (NASDAQ:KYAK) for $1.8 billion in a stock and cash deal (the two companies recently agreed to set a date for their merger). Kayak assists customers in comparing prices for booking flights, hotels, car rentals and related package deals.
Priceline’s initial intention was to keep the Kayak name and website independent and to profit from the partnership by expanding internationally. For Priceline.com Inc (NASDAQ:PCLN) this was not a rare acquisition, as the company had already acquired similar companies such as Agoda.com, Booking.com, and Active Hotels. The acquisitions give the company access to travelers in Asia and other markets worldwide. Furthermore, the true reason behind the purchase of Kayak lies in an effort to compete against the dominance of Google (NASDAQ:GOOG) in travel searches and to expand Priceline’s advertising platform.
International booking & mobile platform
International bookings at Priceline.com Inc (NASDAQ:PCLN) climbed 40% to $7 billion in the past quarter, accounting for 85% of total bookings. Both the company and the industry as a whole are operating in a world of uncertainty and a risky macro environment. Europe is viewed as the future growth driver for the company, though the financial crisis in Europe hit an already shaky industry and forced potential travelers to stay home.
Priceline is considered highly innovative and is often an early adopter of new technology. The company has already heavily invested in advancing its mobile platform as an increasing number of consumers are using mobile devices. The mobile platform offers great growth potential for travel services, especially for last minute travelers.