OUR TAKE
Priceline Goes in Reverse

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By Rick Aristotle Munarriz (TMF Edible)
June 17, 2003

"Strike that. Reverse it!"

That was Willy Wonka's remark when he found himself putting his verbal cart before the horse. Wall Street seems to have taken that same kind of shine to its own blunders, with the continued practice of striking out low share prices with reverse stock splits.

Priceline.com (Nasdaq: PCLND) became the latest public entity to try to break out of the penny stock nadir with its 1-for-6 reverse stock split. But if you find yourself doing a double take when you see the company trading in double digits for the first time in three years and are inspired by this quarter's $0.12-$0.18 EPS projections, take heart and divide by six.

See, Priceline's charms aren't real right now; it's wearing falsies.

One has to wonder why the "Name Your Own Price" travel specialist resorted to this kind of sleight-of-hand chicanery. Online travel is rocking and the company really was just a few ticks away from getting over the $5 hump. While reverse splits are often makeshift paper strings to hold off the anvils of delisting, Priceline wasn't in that boat at all.

Even though our own Tom Jacobs took a look at the practice earlier this year and found that some stocks like Microstrategy (Nasdaq: MSTR) and Brightpoint (Nasdaq: CELL) thrived since their own reverse splits, Priceline shouldn't have cheated.

Our new Travel Center highlights Priceline and its online peers, including The Sabre Group's (NYSE: TSG) Travelocity, Hotels.com (Nasdaq: ROOM), and Expedia (Nasdaq: EXPE). After all, Priceline has a healthy balance sheet and has shown a welcome knack for profitability.

Its own stock had quadrupled off last year's lows. It was doing just fine before taking a corked bat to its share price. Sorry, Priceline, naming your own price is something best left to your customers.

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