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Thursday, 11 May, 2000, 15:10 GMT 16:10 UK
Lastminute's shares slide

Intensifying competition in the online travel business and slumping US tech stocks sent Lastminute.com's shares plunging 12% to 180p on Thursday.

Nearly 900,000 people bought a stake in Lastminute.com in what was the UK's most high profile internet float, in March.

But in the past few days, several large travel and leisure companies have announced plans to launch their own web sites.

For example, on Thursday, British Airways re-announced its plans to launch an internet travel agency, with 10 other European airlines to cut huge ticketing and distribution costs.

Analysts said the 6% drop in the US tech-rich Nasdaq stock market was triggering the stock's fall, but news of increasing competition compounded the fall.

"The fall is probably mainly due to Nasdaq, but if the market turns cold, you just need one negative announcement and a share can go 'whoosh'," said one analyst.

Lastminute.com's shares have taken a beating since its flotation in March.

The company's shares were issued at 380p, shot up to 480p, but then fell back sharply to about 150p before a recent rally.

Competition heating up

More pressure came as UK holiday operator Airtours said it would launch sites for last minute flight and holiday reservations and would not supply holidays to sites like Lastminute.

In addition, hotel groups Forte, Hilton and Accor announced earlier this week they were setting up a joint venture, enabling customers to book rooms in Europe online.

But Lastminute.com executives downplayed the emergence of new travel web sites, with the company's managing director Brent Hoberman describing the British Airways site as an "insignificant" threat.

"This is full service travel agency, they are launching on the web, and that is not our business," Mr Hoberman said.

"We do something very different from these guys," he said.

Some analysts applaud the company's business model, saying it fills an important niche in supplying surplus goods - from theatre tickets to champagne - to 'cash rich, time poor' impulse purchasers.

But others say Lastminute.com's business model is flawed, and that the company has just been riding on the frenzy for internet stocks.

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See also:

04 May 00 | Business
Lastminute.com losses mount
22 Mar 00 | Business
Further fall for Lastminute shares
17 Mar 00 | Business
Lastminute loss for investors
09 Mar 00 | Business
Lastminute ups its float price
23 Feb 00 | Business
BA flies the web
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