Expedia shares fall as strong dollar hits earnings

Investors soured on Expedia after the travel booking group became the latest company to say that a strong dollar weighed on its fourth-quarter results.

The company reported a 30 per cent decline in profits to $66m, or 50 cents a share, in the three months to the end of December. Sales gained nearly 18 per cent to $1.36bn.

Analysts had forecast earnings of 78 cents a share, on sales of $1.37bn. Adjusted earnings of 86 cents a share missed estimates for $1.02 a share.

Expedia reported a 24 per cent year-on-year gain in bookings to $11.3bn but this slowed from 29 per cent growth in the previous quarter.

Despite a "generally improving travel environment", the company said its average daily room rates were flat from a year ago because of costs of currency conversion.

"One trend that we have observed is that due to the strength of the dollar, we're seeing a lower balance of European demand coming into the US because the US looks more expensive," said chief executive Dara Khosrowshahi.

Mr Khosrowshahi said "uncertainty around currency movements" was prompting more people to "travel locally".

But he added that there was higher demand from US travellers visiting Europe.

The company also said its Chinese subsidiary eLong was affected by a highly competitive local environment.

Analysts at Oppenheimer downgraded the stock from "outperform" to "market perform" and removed their price target as they expect eLong to hurt 2015 profits and as a strong dollar hurt sales.

Expedia shares, which gained 21 per cent in the past year, declined more than 9 per cent to $79.87.

Shares in rivals also fell on Friday with Priceline shares declining more than 3 per cent to $1,008.60 while Orbitz shares slipped 1 per cent to $9.37.

A decline in monthly active users pushed shares of Yelp 20 per cent lower to $45.72, despite better than expected fourth-quarter results. The company said monthly active users fell from 139m to 135m in the previous quarter.

Shares of utility companies slid on Friday with every gas and electric power provider listed on the S&P 500 declining, as a better than expected payrolls report prompted a re-evaluation of when the Federal Reserve would begin to lift rates.

Utilities proved the best trade last year, outpacing all other sectors with a 24.3 per cent gain. The industry's appeal was bolstered by its relatively high dividend yield and low long-term interest rates, which provided for cheap access to debt.

But the threat of higher rates from the Fed, and in turn a jump in US Treasury yields on Friday, had investors rethinking the bet.

The S&P 500 utility index fell 1.8 per cent to 242.45.

Shares of American Electric Power fell 3 per cent to $60.80, FirstEnergy slipped 3 per cent to $40.00, Sempra Energy declined 2 per cent to $110.66 and Entergy slid 2 per cent to $84.60.

Financials are proving the prime beneficiary of the strong jobs data with the S&P 500 Financials index advancing 1.5 per cent.

The S&P 500 gained 0.4 per cent to 2,070.27, the Dow Jones Industrial Average advanced 0.2 per cent to 17,927.68 and the Nasdaq Composite climbed 0.4 per cent to 4.782.063.

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