Through TheFLY's Eyes: Expedia, Inc.
from Theflyonthewall.com






Big Miss

Expedia’s (EXPE) stock is getting crushed by investors as the company reported bizarre results. Expedia was having a tough 2005 when Barry Diller told investors that 2006 would be a year of investment and some higher expenses. However, most of the expense increase in the quarter came from higher selling, general & administrative expenses, not the line items that one expects big increases in when a company is investing for the future.

This suggests that the company’s new ad campaign was a complete failure. Often when a company says it is investing for the future, it is referring to infrastructure or incremental investments in marketing. Selling & marketing jumped 12.3% year on year and general & administration jumped 28%, while sales increased a mere 1.8%. That is a big mismatch in spending and return on those marketing dollars.

Expedia has a lot of work to do. Diller’s companies usually do not mess up with marketing campaigns.