TZOO - Sector: Services---Industry: Internet Information Providers

[soxguy]

       

Press Release Source: Travelzoo


Travelzoo Announces Business Initiatives in France, Hong Kong, and Japan
Friday July 13, 10:40 am ET


NEW YORK--(BUSINESS WIRE)--Travelzoo (NASDAQ:TZOO - News), a global Internet media company, today announced new business initiatives in France, Hong Kong, and Japan. Travelzoo France officially launched its business this week with the publication of its first Top 20(TM) list. In June, Travelzoo's Hong Kong office began publishing a Top 20(TM) list in Chinese for Hong Kong. On September 1, Travelzoo will open an office in Tokyo, Japan.

"We are continuing to aggressively implement our strategy of turning Travelzoo into a global media brand," said Ralph Bartel, chairman and chief executive officer, Travelzoo. "While we expect these initiatives to have a material negative impact on our earnings in 2007 and 2008, due to significant expenses related to subscriber marketing campaigns in new markets and operating losses during the start-up phase, we believe that it is an attractive strategy for Travelzoo in the long-term. As a global organization we are able to source the very best travel deals wherever they occur, research and review them with local expertise, and publish them to our more than 11 million subscribers."

In March, Travelzoo opened an office in France, followed by Hong Kong in April, both employing local staff. On September 1, Travelzoo will open an office in Tokyo.

In 2005 Travelzoo launched its business in the U.K., followed by the launch of its business in Canada and in Germany in 2006.


Does this mean it's back to the low 20's or worse? We'll see.

[Garoh]

Tzoo sees costs of moves hurting 2007 and 2008 Earnings 

This is making the stock go down

[soxguy]

I guess long term it won't matter,but the short term pain is real.

[pinoleropuro]

yeah well, how short is short term? 'cuz I've had it since April after the big drop and it seems to me it just keeps dropping and its making me impatient.
. Especially since I only have TZOO and CIMT and I am down on both.
since I've had them.
its starting to feel more like this short term wants to turn into a short term long term.

[David Randolph]

yeah well, how short is short term? 'cuz I've had it since April after the big drop and it seems to me it just keeps dropping and its making me impatient.
. Especially since I only have TZOO and CIMT and I am down on both.
since I've had them.
its starting to feel more like this short term wants to turn into a short term long term.

And why do you have just TZOO and CIMT?

You're impatient, and yet you picked the two where patience is most needed, because they're not in uptrends. Perhaps that's the reason why you bought specifically these two, because they were going down, right?

Anyway, because you're not diversified enough you're starting to get emotional about stocks, and you know that's not the right course of action for you to take. You're probably watching every tick on those two stocks, always thinking and wondering what will happen next, feeling just a bit more sad when they go down, and a bit more relieved when they go up a bit.

I know how it feels, I've done that in the past too. Brrr, I just don't want to go through that pain again, so let me leave it alone and tell you to reconsider diversifying your investments a bit more.

As for TZOO, there were positive news out:

• Travelzoo Announces Business Initiatives in France, Hong Kong, and Japan
Business Wire (Fri 10:40am)

The CEO of TZOO, which owns 56% of the shares outstanding, is pursuing his global expansion plan. He knows the business better than anyone else, and goes this way, because he thinks it is the best way to increase long term shareholder's value.

Yet, the market, little and big investors, are impatient, they want profits growing every quarter in a linear way so they can feel safe. And, because the path to a higher long term value has some short term pain, investors sold their shares.

Considering my valuation model, which calls for a share price of $87.32 three years from now, it was reinforced by yesterday's news.

I'm more certain now that the company will achieve 23% revenue CAGR and 30% net profit margin in 2009 than what I was before these expansion plans.

Or, do you think the owner of 56% of the shares is doing this because he likes to lose money?

I'll continue holding TZOO for the long term and I expect the Main Portfolio to benefit immensely from TZOO over the long run. Now for the short term, if TZOO goes down to say, $20, some subscribers of the 3 SOF Premium service will cancel the service, as it always happens when one stock or another goes down, but I personally don't care about that, since I know this is the right course of action to take.

(no chart available for TZOO today, only on Tuesday I'll have my Metastock software working properly).

[pinoleropuro]

Thank you David. 
I am a newbie and I don't have much capital so if I diversify even with large earnings it wouldn't amount to much of anything. so I was trying to do a 33%, 33%, 33% diversification.
again because I saw these going down I figured based on the fundamentals and charts that I would be ok when these decided to come up.
I am trying to learn by reading your forum on a daily basis because I am pretty oblivious to all this market stuff.
I really do appreciate all your hard work. its just that for a beginner like my self its hard for me to really choose the right one for me.
My 401k is up 15% for the year so far yet I am down almost 20% for the year. 
I guess in my learning its turning into an expensive lesson for me.
I am going to try to hold off my emotions but it is hard to see them go down.
so please bare with me as I try to follow your lead.
Thanks again.

[soxguy]

*DJ TravelZoo Cut To Neutral From Buy At First Albany >TZOO

.

  (END) Dow Jones Newswires

  July 16, 2007 07:22 ET (11:22 GMT)

  Copyright (c) 2007 Dow Jones & Company, Inc.- - 07 22 AM EDT 07-16-07

**Brought to you by Scottrader, a product of Scottrade      More pain I guess.

[David Randolph]

Thank you David. 
I am a newbie and I don't have much capital so if I diversify even with large earnings it wouldn't amount to much of anything. so I was trying to do a 33%, 33%, 33% diversification.
again because I saw these going down I figured based on the fundamentals and charts that I would be ok when these decided to come up.
I am trying to learn by reading your forum on a daily basis because I am pretty oblivious to all this market stuff.
I really do appreciate all your hard work. its just that for a beginner like my self its hard for me to really choose the right one for me.
My 401k is up 15% for the year so far yet I am down almost 20% for the year. 
I guess in my learning its turning into an expensive lesson for me.
I am going to try to hold off my emotions but it is hard to see them go down.
so please bare with me as I try to follow your lead.
Thanks again.

Hi pinoleropuro, thanks for sharing your thoughts

You say:

1)

I am a newbie and I don't have much capital so if I diversify even with large earnings it wouldn't amount to much of anything.

2)

I guess in my learning its turning into an expensive lesson for me.

You're not investing much capital, yet, the learning process seems quite expensive to you. Perhaps you're too risk averse, or else you're investing with money you absolutely can't afford to lose.

That's always a setup for stress and anxiety. I've been in that situation in the past too and I know how it feels.

I guess that after what happened with TZOO yesterday you're not feeling better

But I urge you to put things in perspective. For example, once I've lost $100,000 in just a bit more than a month, with $50,000 going in the first week. It was all I had. After that I was depressed for over a year ... we'll talk some more, but I'm really late for today's updates, so I have to move on.

TZOO has been falling because of an analyst downgrade:

TZOO: First Albany Cuts to Neutral from Buy; Analyst Notes

They don't like the company's expansion plans. I like them, over the long term they'll probably increase the company's profitability.

Now everybody is discounting Q2 earnings will be weak, that seems priced in already. I know the chart is breaking down, and that means I'll have to be very patient with TZOO, the way its CEO is, as he holds 56% of the company.

I'll continue holding TZOO.

[soxguy]

Travelzoo Wants to See the World
By Rick Aristotle Munarriz July 17, 2007
1
Recommendation
After years of helping penny-pinchers with getaways to exotic locations, travel publisher Travelzoo (Nasdaq: TZOO) wants to get away and see new people too. The company announced an ambitious expansion plan on Friday, with new initiatives in Hong Kong, France, and Japan. However, watching the stock shed 13% of its value in the two days since issuing the press release makes one wonder if Travelzoo's globetrotting pursuits might actually be a cover for an earnings warning.

The company pulled no punches in the release.

"While we expect these initiatives to have a material negative impact on our earnings in 2007 and 2008, due to significant expenses related to subscriber marketing campaigns in new markets and operating losses during the start-up phase, we believe that it is an attractive strategy for Travelzoo in the long term," CEO Ralph Bartel noted in the announcement.

Sure, it costs money to set up camp in new territories. However, not all of the overseas expansion plans were new. Travelzoo issued a press release when the office in France opened in March. A month later, it revealed its entry into Hong Kong, a service that was eventually launched last month.

Japan is new. The office will open in two months. Unfortunately, near-sighted investors get spooked by terms like "material negative impact" and "significant expenses" when they are buying into a high-margin company.

Growing its reach overseas is important. The company launched its site in the United Kingdom two years ago. It followed that with steps into Canada and Germany last year. However, the company's clever concept -- packaging sponsored travel bargains in its weekly "Top 20" email -- remains mostly a domestic phenomenon. Through the end of March, Travelzoo has amassed a mailing list of 10.6 million willing North American recipients. The free subscribers totaled less than 0.8 million in Europe.

The moat is also questionable. It is way too easy for a rival to copy the Travelzoo playbook. Smaller sites like Sherman's Travel Top 25 are giving it a go, and even Priceline.com (Nasdaq: PCLN) rolled out a slightly similar PriceBreakers feature earlier this year.

Sure, it may be a conflict of interest for a mainstream portal like Expedia (Nasdaq: EXPE) or Travelocity to follow suit, but there's really nothing to stop popular Web portals like Yahoo! (Nasdaq: YHOO) or Google (Nasdaq: GOOG) from diving in if they feel there is more money to be made that way.

By casting its warning net so far -- a "material negative impact" in 2008 seems so far away -- Travelzoo is spooking away investors that remember when the company's stock was on fire as one of the biggest gainers of 2004. Then again, 2004 also seems pretty far away these days.

Bon voyage, Travelzoo.

This doesn't help much. Oh well,it's only money.

[DragonAMG]

In my opinion.... this is pure manipulation.  I think that Bartel is actually trying to lower the price of this stock so that he can load up and beat estimates which would cause this stock to skyrocket. 

Just my 2 cents.

I am holding it.

[soxguy]

In my opinion.... this is pure manipulation.  I think that Bartel is actually trying to lower the price of this stock so that he can load up and beat estimates which would cause this stock to skyrocket. 

Just my 2 cents.

I am holding it.

I hope you're right. As always,we'll see.

[DragonAMG]

                                I hope you're right. As always,we'll see.

I hope I'm right too....

[David Randolph]

The author of the article soxguy brought us sure has a point, but it is just another way of saying: "oopps, perhaps the next quarter won't be good, forget about the long term value creation".

If TZOO's management wanted, they could rise EPS imediatelly. They would just shut down their entire international effort and post a $0.3 or more EPS. That way the stock would rise a good 30 or 40% over the short term, but not over the long term, because there wouldn't be investments and ways to grow the business.

TZOO has been a very tough ride, but I'll keep on holding and focusing on the company's EPS three years from now, when all international operations will probably be profitable.

[soxguy]

 








 


Travelzoo (TZOO): Time for a Reality Check

First Albany downgraded shares of Travelzoo (NASDAQ: TZOO) to 'Neutral' from 'Buy' today and their shares are down 7% and dropping. With shares trading just under $25, this stock is starting to look more appealing.

The Masters think TZOO shares could go even lower now that it expects its earnings in 2007 and 2008 to be hurt by new business initiatives in France, Hong Kong and Japan.

Say what you will about this web 2.0 company but Travelzoo has only 80 or so employees and revenue has grown an average rate of 57% for the past three years. Let Wall Street continue to hate the stock, we'll stand on the sidelines and once it goes down for the count, it will be time to buy. These guys still managed to pull in $50.7 million in 2005 and $69.5 million in 2006. If the stock gets even lower, maybe Barry Diller will take it out or some other big money guy like Carl Icahn. This is Wall Street my fellow Masters, never say never.

I would love to see Expedia (EXPE) come in and buy up TZOO, it would be a great match with Hotwire.com and Hotels.com already under their belt. Let's see some consolidation in the online-bargain-travel sector because new travel sites that can save you money seem to pop up every two weeks - like Yapta.com (what do these guys do again that is so different?)

Look online travel companies, there are only so many websites the American consumer can remember, if you keep cranking out new sites, how in the hell do you expect us to remember them? Most of us know the one's that are most advertised.

Expedia.com (EXPE)
Priceline.com (PCLN)
Orbitz.com

blah, blah, blah...
Travelzoo, do yourself a favor, put your company up for sale, and cash out -- big time. Make your 80 employees super rich and never work again, then let everyone fight to buy your company. It's the American dream, work hard, find a niche, then sell it to the highest bidder. After it's done, you sit back and sip Mojitos poolside for the rest of your life. Or you could struggle to gain market share and grow your company in a cut throat business that will end up consolidating into a few major players in the next 5 years. Watch your revenue decline year over year, and those shares that were once worth $25 become worth $5, then $2, then OTC BB death.

Article written by: Frank Lara Jr.
Article posted on: July 16th, 2007


Do you hate us more than Jeff Mackey ? Voice your thoughts at Our Forum.

Disclaimer: The Author does not hold any position in TZOO, EXPE, or PCLN. But he's thinking about it.



Another take on TZOO.

[berloga]

David, the problem I see with TZOO is that you look 3 years ahead as there is little hope for the near future in this stock. Whereas the stellar performers of the portfolio deliver already today and have bright plans for the future. I agree, international expansion may bring fruits to
the table, but when it happens nobody knows. TZOO does not look attractive to investors, I guess, so many bail out. At the same time, you got 13 other stocks to worry about, so perhaps we can keep this for "3 years" or until it begins generating profits from its new operations.