Forever the bridesmaid, eLong
Last night's fourth-quarter report out of travel portal eLong wasn't pretty where it counted. Sure, growing net revenue by 26% to the U.S. equivalent of $11.4 million is a whiff of refreshing acceleration on the top line. It certainly beats the 8% year-over-year increase that eLong mustered three months ago.
Unfortunately, eLong's biggest gains came in lower-margin airfare ticketing. Lower gross margins, coupled with higher operating costs, helped suck the line gains dry on the way to the bottom line. Tack on a foreign exchange hit to the resulting meager operating profit, and eLong's loss widened to $0.07 per American depositary share (ADS) for the period, well off the small, penny profit that investors were expecting.
Then again, Wall Street is used to living with disappointment. eLong missed analyst profit targets in each of the five previous quarters. Even if you give eLong the benefit of the doubt here, given the positive operating profit, eLong remains a laggard in a supposedly hot market.
Ctrip is growing nicely. Even stateside portals like Priceline.com
The bright side here is that eLong has plenty of time to get it right. The company's cash-rich balance sheet is loaded with $158.7 million -- or $6.24 per ADS -- in cash.
The downside to this is that if eLong doesn't turn things around this year, when the Olympic Games in Beijing should help online travel specialists in China thrive, one would have to wonder if there will ever be a clearer catalyst than that.
China has so many growth vehicles to offer leading up to the Olympics -- Ctrip, airport advertiser AIRMEDIA
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