Priceline lays off workers, drops expansion plans

Just a month after laying off 16% of its workforce, struggling e-commerce company Priceline.com has said it will cut 48 more jobs.

          Just a month after laying off 16% of its workforce, struggling e-commerce company Priceline.com has said it will cut 48 more jobs, postpone the addition of several new name-your-own-price services and drop plans to enter the Japanese market.

          The new layoffs will reduce the Norwalk, Conn.-based company's workforce by another 11%. Priceline said the latest cutbacks are being made as part of a strategy under which it will refocus on core businesses such as selling discounted airline tickets, cars, long-distance phone service and hotel reservations.

          Being dropped for now are previously announced plans to offer business-to-business, term life insurance and cellular phone services through the Priceline Web site. The company said it will "indefinitely postpone" the rollout of those services and gave no timetable for resuscitating them. Company officials couldn't be reached for additional comment.

          Priceline also announced that talks with Softbank E-Commerce to start up a name-your-own-price e-commerce site in Japan have been discontinued after the two companies couldn't reach a final agreement on the plan. Priceline and Softbank had said in July that they were teaming up on a Japanese joint venture.

          When Priceline announced its third-quarter financial results and the first round of layoffs last month, company officials promised to review all planned new business ventures and apply strict financial criteria to them.

          "As a result of those reviews, we are re-focusing all of our efforts on achieving profitability with our core businesses," said Daniel Schulman, Priceline's president and CEO, in a statement that was issued as part of yesterday's cutback announcement. He added that some of the money saved by avoiding new business start-up costs will be used to pay for new marketing programs aimed at promoting Priceline's core services.

          Gene Alvarez, an analyst at Meta Group Inc. in Stamford, Conn., said Priceline's ongoing cutbacks reflect the difficulty the company is having in turning a profit from its business of offering goods and services to online shoppers at discounted prices.

          "You can't have high overhead and be in a discount business," Alvarez said. "I can understand why they would abandon moving into new [businesses] when they can't even get the old ones ... going or keep them [operating]," he added, noting that Priceline already abandoned efforts to sell groceries and gasoline on a name-your-own-price basis.

          Jim Williamson, an analyst at IDC in Framingham, Mass., also said there were no big surprises in the latest announcement. Many online companies have seen success, then hurt themselves by expanding into new and unexplored sales territories, he said. When that happens, Williamson added, they have no choice but to cut back.

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