Dueling Fools
July 21, 1999

What's My Priceline?
The Bear Rebuttal

by Rick Aristotle Munarriz
([email protected])

"I think what we've seen from the company thus far is the proverbial tip of the iceberg."

-- Paul Larson, circa five minutes ago

Kudos for my buddy Paul to have the vision that the Titanic did not. This is in fact an icy shipwreck just waiting to happen. But my worthy Fool is still stretching the truth on many other fronts. He calls the company an "effective matchmaker." With an 87% failure rate, I think "Cupid with an eye patch" is more apropos.

Paul then praises the patent of a company that is fending off its alleged originator. Please, let's be clear here. Like eBay last year, Priceline is waving around its $14 billion market cap -- the well-funded competition will come. Unless Priceline begins to lock up exclusive suppliers -- and even Paul understands the "opportunity costs" ramifications that represents -- the genre is going to be blown wide open sooner rather than later. Priceline is promising the participating airlines cheap stock (yes, that's right, more dilution) but it will take more than that to make them exclusive. My fellow Duelist goes Trekkie on me, claiming that the company is "shielded from competitors." In the words of Scotty the engineer, "These shields captain, I don't think they can hold much longer!"

Aye. And the truth is that Priceline is not going where no man has gone before. Airlines like Continental are going direct to the consumers with steep last minute discounts based on capacity. Paul is excited over the prospects beyond its travel-related offerings, but I'm not sure why. Hard goods like new cars or softer services like bank loans don't have to give away excess capacity that is worthless if unused. Besides, the market for advocated direct shopping in those fields has been around for ages.

And why does Paul insist that having some prankster bid pocket change on a Jaguar is "extremely useful" information for the carmaker? Priceline is not about reality -- it's about individuals looking for a freebie that rarely comes their way.

So, yes, that is the tip of the iceberg. Are you skilled enough to steer away?

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