With the September swoon in its airline ticket sales continuing into last month, struggling e-commerce venture Priceline.com Inc. yesterday announced a series of restructuring moves that includes a 16% reduction in its workforce.
The Norwalk, Conn.-based company disclosed the layoffs while reporting its third-quarter financial results, which made it official that Priceline's discount-ticketing business headed south in the summer and is continuing to do so. Ticket sales last month were down about 20% from their already-weak September levels, the company said.
Daniel Schulman, Priceline's president and CEO, said in a statement that demand for tickets "has stabilized over the last few weeks." But fourth-quarter revenue is expected to decline from the $341 million total that Priceline reported for the third quarter, he added.
As a result, Schulman said, Priceline is laying off about 90 of its 535 employees. The company also announced the appointment of a new chief operating officer and the resignation of its chief financial officer. In addition, it plans to implement a new compensation program "designed to retain and motivate key employees."
The restructuring moves will saddle Priceline with an undetermined charge against its fourth-quarter earnings, Schulman said. "While the effect of these charges will adversely impact fourth-quarter results, we believe they are necessary and appropriate to position the company for long-term improvement of its operating results," he noted.
Schulman also vowed to improve Priceline's customer service capabilities. The company's development, customer service and marketing groups "are working on enhancements to our Web site, product delivery and [other] processes to incorporate both consumer and third-party feedback," he said. "These teams are also looking at new ways to ensure that customer questions or issues are promptly and fairly addressed."
Priceline recently was kicked out of the Better Business Bureau of Connecticut for its alleged failure to respond to complaints from users of its Web site. The company also is being investigated by Connecticut's attorney general, who is looking at whether Priceline has fully and accurately disclosed product terms, prices and conditions.
For the third quarter, Priceline reported a net loss of $2 million. The decline in airline ticket sales has been the primary cause of the company's problems. In a conference call with financial analysts yesterday, Schulman said nonairline revenue grew $10 million in the third quarter compared to the second quarter. But airline sales, which form the lion's share of Priceline's business, dropped more than $20 million, he added.