Expedia Inc. said Monday it is slashing the number of shares in its planned buyback by 80% due to a lack of acceptable funding, sending shares down 8.3% to $26.90 in early trading. On June 19, Expedia said it intends to repurchase up to 116.7 million shares (approximately 42% of common stock) at a price range of $27.50-$30.00, giving shares their biggest boost since the company went public in July 2005. Under the amended offer, Expedia now says it only willing to purchase up to 25 million shares (about 9% of the total outstanding) at the same price range, to expire August 8. "While we remain confident in Expedia's long-term prospects and will continue to be net buyers of our shares, the terms available to us in the current debt market environment were simply unacceptable," said chairman Barry Diller. "Our confidence in Expedia's future is well held, with second quarter transaction growth of 14% -- our highest in six quarters -- and our expectation of exceeding consensus estimates." Liberty Media owns a 15.7% stake in Expedia.
Sources: Press release, MarketWatch, Bloomberg, Reuters, Wall Street Journal
Commentary: Expedia: Share Buyback Affirms Hidden Value • Expedia: Diller's Buyback Plan Does Create Value • Expedia Up 16% on News of $3.5B Buyback
Stocks/ETFs to watch: Expedia Inc. (NASDAQ:EXPE), Liberty Media Capital (LCAPA). Competitors: Travelzoo Inc. (NASDAQ:TZOO), Priceline.com Inc. (NASDAQ:PCLN). ETFs: PowerShares Dynamic Leisure & Entertain (NYSEARCA:PEJ)
Earnings call transcript: Expedia Q1 2007
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.