Priceline makes its first profit

Quentin Tarantino leads Priceline's publicity campaign

US auction site Priceline has become one of the first big internet start-ups to turn a profit.

The firm announced that it had made a net profit of $2.8m in the second quarter, compared with a loss of $11.7m in previous three months.

Priceline, which allows customers to bid the price they think appropriate for a range of travel-related services, also raised its forecast for the third quarter.

The company has been mired in restructuring for the past few months, after suffering a 90% fall in its share price in 2000.

It fired its chief executive, Daniel Schulman, in May, and replaced him with chairman Richard Braddock.

In early trading on Wednesday, Priceline's shares were up 9%, to $9.72.

Growth plans

Priceline attributed the result to strong growth in its hotel and car rental businesses.

Buoyed by the performance, it now plans to extend its name-your-price business model into non-travel markets such as telecoms, mortgages and car sales.

Priceline lets surfers bid the price they want

The firm also announced a revamp of its marketing strategy.

Although so far it has relied on using former Star Trek actor William Shatner as a spokesman, it plans to launch a new campaign using a range of younger celebrities, including film director Quentin Tarantino.

Earlier this year, it launched a UK version of its service, its first venture outside the US market.

The firm has also started to eye the Asian market, talking about joint ventures with Hong Kong firms Hutchison Whampoa and Cheung Kong.

The two firms, controlled by tycoon Li Ka-shing, bought a combined 30% stake in Priceline in June.

Exclusive club

By moving into the black, Priceline joins an elite group of internet start-ups.

Among larger firms, only auctioneer eBay has achieved significant profitability so far.

Others, including retailers Amazon and Lastminute, have found profits elusive.

According to a recent report from consultants McKinsey, online retailers have average operating margins of -82%, in other words they are still losing a lot of money on every sale.