Name-your-own-price travel website Priceline stunned Wall Street on Tuesday by reporting its first ever profit with figures that were a massive five times larger than anticipated.
Until it began to lose momentum last year, Priceline was considered one of the internet's success stories, although not financially. The company was originally founded to offer consumers cut price air tickets over the web in a model that meant customers had to trade flexibility for savings.
People who buy travel tickets on Priceline agree, by submitting their credit card numbers, to an offer before they know details such as departure airport, times of flight connections and main flight times. This appeals to consumers who are able to be flexible about their travel arrangements, but not to those who can't.
Now that Priceline is concentrating on this core travel business, after dalliances with groceries and mortgages, it is finally in the black. Excluding one-time items, net profit was $11.7m, or five cents per share. Analysts were expecting one cent per share.
Its net loss last year was coincidentally also $11.7m. Sales totalled $364.8m, four per cent higher than the $352.1m achieved in the same period last year.
The company said that the secret of its success was not just selling airline tickets, but fast growth in hotel room bookings and car rental sales.
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