Priceline.com (PCLN)

Throughout 2006, 2007 and 2008, our international operations experienced significant year-over-year growth in their gross bookings (an operating and statistical metric referring to the total dollar value, inclusive of all taxes and fees, of all travel services purchased by our customers).  This growth rate has contributed significantly to our growth in revenue, gross profit and earnings per share.  We expect our international operations to experience a decline in their growth rate in future years as the absolute level of their gross bookings grows larger.  We expect other factors to slow the growth rates of our international business, including, for example, worldwide recession, the recent strengthening of the U.S. dollar versus the Euro, further declines in hotel ADRs, further increases in cancellations, travel market conditions and the competitiveness of the market.  A decline in our international operations’ growth rate could have a negative impact on our future revenue and earnings per share growth rates and, as a consequence, our stock price.

In addition, our international operations rely on various third party distribution channels to distribute hotel room reservations.  Should one or more of such third parties cease distribution of our international operations’ reservations, or suffer deterioration in its search engine ranking, due to changes in search engine algorithms or otherwise, the business of our international operations could be negatively affected.  Similarly, a significant amount of our international business is directed to our own websites through advertising campaigns on Internet search engines, primarily Google, whose pricing and operating dynamics can experience rapid change both technically and competitively.  We have experienced increased competition and increased costs associated with our advertising campaigns.  If a major search engine changes its pricing, operating or competitive dynamics in a negative manner, our business, results of operations and financial condition would be adversely affected.

The strategy of our international operations involves rapid expansion into countries in Europe, including eastern Europe, Asia, North America and South America and elsewhere, many of which have different customs, different levels of customer acceptance of the Internet and different legislation, regulatory environments and tax schemes.  For example, recent civil unrest during the peak booking season in Thailand, a key market for our Agoda business, negatively impacted booking volumes and future civil or political unrest would further disrupt Agoda’s business.  In addition, compliance with foreign legal, regulatory or tax requirements will place demands on our time and resources, and we may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax consequences.  If our international operations are unsuccessful in rapidly expanding into other countries, our business, results of operations and financial condition would be adversely affected.

Throughout 2006, 2007 and
2008, our international operations
experienced significant year-over-year growth in their gross bookings (an
operating and statistical metric referring to the total dollar value, inclusive
of all taxes and fees, of all travel services purchased by our customers).  This growth rate has contributed
significantly to our growth in revenue, gross profit and earnings per
share.  We expect our international operations to experience a
decline in their growth rate in future years as the absolute level of their
gross bookings grows larger.  We expect
other factors to slow the growth rates of our international business, including, for example, worldwide recession, the recent strengthening
of the U.S. dollar versus the Euro, further declines in hotel ADRs, further
increases in cancellations, travel market conditions and the competitiveness of
the market.  A decline in our international operations’ growth rate
could have a negative impact on our future revenue and earnings per share
growth rates and, as a consequence, our stock price.

In addition, our international operations rely on various
third party distribution channels to distribute hotel room reservations.  Should one or more of such third parties
cease distribution of our international operations’ reservations, or suffer deterioration in
its search engine ranking, due to changes in search engine algorithms or
otherwise, the business of our international operations could be negatively affected.  Similarly, a significant amount of our international business is directed to our
own websites through advertising campaigns on Internet search engines,
primarily Google, whose pricing and operating dynamics can experience rapid
change both technically and competitively. 
We have experienced increased competition and increased costs associated
with our advertising campaigns.  If a
major search engine changes its pricing, operating or competitive dynamics in a
negative manner, our business, results of operations and financial condition
would be adversely affected.

The strategy of our international operations involves rapid
expansion into countries in Europe, including eastern Europe, Asia, North
America and South America and elsewhere, many of which have different customs,
different levels of customer acceptance of the Internet and different
legislation, regulatory environments and tax schemes.  For example, recent civil unrest during the peak booking season in Thailand, a key
market for our Agoda business, negatively impacted booking volumes and future
civil or political unrest would further disrupt Agoda’s business.  In addition,
compliance with foreign legal, regulatory or tax requirements will place
demands on our time and resources, and we may nonetheless experience unforeseen
and potentially adverse legal, regulatory or tax consequences.  If our international operations are
unsuccessful in rapidly expanding into other countries, our business, results
of operations and financial condition would be adversely affected.

Throughout 2007 and 2006, our international operations experienced significant growth in their gross bookings.  This growth rate has contributed significantly to our growth in revenue, gross profit and earnings per share.  We believe that this growth rate has also been a significant driver in the increase in our stock price over the last year.  We expect our international operations to experience a significant decline in their growth rate in future years as the absolute level of their gross bookings grows larger.  Other factors could also cause slowing growth rates in the international business, including changes in foreign currency exchange rates, travel market conditions, changes in hotel pricing or availability, the competitiveness of the market and macro economic weakness.  A decline in our international operations’ growth rate could have a negative impact on our future revenue and earnings per share growth rates and, as a consequence, our stock price.

In addition, our international operations rely heavily on various third parties to distribute hotel room reservations, and our international operations’ distribution channels are concentrated among a number of third parties.  Should one or more of such third parties cease distribution of our international operations’ reservations, or suffer deterioration in its search engine ranking, due to changes in search engine algorithms or otherwise, the business of our international operations could be negatively affected.  Similarly, a significant amount of our international business is directed to our own websites through participation in pay-per-click advertising campaigns on Internet search engines whose pricing and operating dynamics can experience rapid change both technically and competitively.  We have experienced increased competition and increased costs associated with our advertising campaigns.  If a major search engine changes its pricing, operating or competitive dynamics in a negative manner, our business, results of operations and financial condition would be adversely affected.

The strategy of our international operations involves rapid expansion into countries in Europe, including eastern Europe, Asia and elsewhere, many of which have different customs, different levels of customer acceptance of the Internet and different legislation, regulatory environments and tax schemes.  Compliance with foreign legal, regulatory or tax requirements will place demands on our time and resources, and we may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax consequences.  If our international operations are unsuccessful in rapidly expanding into other international countries, our business, results of operations and financial condition would be adversely affected.

Our international operations currently distribute hotel rooms primarily through a retail model whereby we earn a commission from the hotel property when the customer checks out of the hotel.  This requires our international operations to pursue collection of commissions relating to hotel room reservations from the hotel after the customer has completed his or her stay.  We do not have extensive experience in collecting commissions from hotels in many of our international markets and failure to sustain an adequate collection rate could negatively impact the business of our international operations.

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Throughout 2007 and 2006,
our international operations
experienced significant growth in their gross bookings.  This growth rate has contributed
significantly to our growth in revenue, gross profit and earnings per
share.  We believe that this growth rate
has also been a significant driver in the increase in our stock price over the
last year.  We expect our international operations to experience a
significant decline in their growth rate in future years as the absolute level
of their gross bookings grows larger. 
Other factors could also cause slowing growth rates in the international business, including changes
in foreign currency exchange rates, travel market conditions, changes in hotel
pricing or availability, the competitiveness of the market and macro economic
weakness.  A decline in our international operations’ growth rate
could have a negative impact on our future revenue and earnings per share
growth rates and, as a consequence, our stock price.

In addition, our international operations rely heavily on
various third parties to distribute hotel room reservations, and our international operations’ distribution
channels are concentrated among a number of third parties.  Should one or more of such third parties
cease distribution of our international operations’ reservations, or suffer deterioration in
its search engine ranking, due to changes in search engine algorithms or
otherwise, the business of our international operations could be negatively affected.  Similarly, a significant amount of our international business is directed to our
own websites through participation in pay-per-click advertising campaigns on
Internet search engines whose pricing and operating dynamics can experience
rapid change both technically and competitively.  We have experienced increased competition and
increased costs associated with our advertising campaigns.  If a major search engine changes its pricing,
operating or competitive dynamics in a negative manner, our business, results
of operations and financial condition would be adversely affected.

The strategy of our international operations involves rapid
expansion into countries in Europe, including eastern Europe, Asia and
elsewhere, many of which have different customs, different levels of customer
acceptance of the Internet and different legislation, regulatory environments
and tax schemes.  Compliance with foreign
legal, regulatory or tax requirements will place demands on our time and
resources, and we may nonetheless experience unforeseen and potentially adverse
legal, regulatory or tax consequences. 
If our international operations are unsuccessful in rapidly expanding into other international countries, our business,
results of operations and financial condition would be adversely affected.

Our international operations currently
distribute hotel rooms primarily through a retail model whereby we earn a
commission from the hotel property when the customer checks out of the hotel.  This requires our international operations to pursue
collection of commissions relating to hotel room reservations from the hotel
after the customer has completed his or her stay.  We do not have extensive experience in
collecting commissions from hotels in many of our international markets and
failure to sustain an adequate collection rate could negatively impact the
business of our international operations.

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