Expedia hit by $3bn impairment charge
Friday, 20 Feb, 2009
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Expedia’s fourth quarter operating income was hit by a $3 billion impairment of goodwill and intangible assets.
This was primarily related to a decline in the global online travel company’s market capitalisation.
An operating loss of $2,889.1 million was recorded for the quarter as a result, against a profit of $128.3 million in the same three months of 2007.
Gross profit for the fourth quarter of 2008 was $484 million, a decline of seven per cent year-on-year primarily due to decreased revenue, the company said.
The gross profit for 2008 came in at $2.3 billion, an increase of nine per cent over 2007, mainly due to increased revenue, partially offset by a 51 basis point reduction in gross margin to 78.39%.
Chairman and senior executive Barry Diller said: "The story of 2008 – and 2009 for that matter – is clearly the global recession and its impact on nearly every sector of our economy.
"When we emerge from this downturn is anyone’s guess, but what certainly is not a guess is Expedia’s global leadership in travel and our conservative management, both of which will allow us to weather a downturn of almost any length and come out stronger than when this mess began."
CEO and president Dara Khosrowshahi added: "While we have taken a substantial write down of the accounting value of our goodwill largely due to significant stock market declines, we believe that the core value of the Expedia brands and marketplace are considerable and lasting.
"We remain focused on growing shareholder value by improving our offerings to travellers, suppliers and advertisers, as well as ensuring appropriate spending and investment levels for this historically difficult demand environment."
Gross bookings in the fourth quarter were down by 11%. North America bookings dropped by 13%, Europe by 11% (down 1% excluding the estimated net negative impact from foreign exchange) and other bookings – primarily Egencia and Asia Pacific operations – increased by four per cent.
Gross bookings for the full year increased by eight per cent. North America bookings rose by four per cent, Europe bookings increased 18% (14% excluding the estimated net benefit from foreign exchange) and other bookings were up by 23%.
by Phil Davies
Phil Davies
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