Priceline Adds New Car And Home Mortgage Offerings

Priceline.com, the name-your-price seller of airline tickets and other products, has added mortgage and new car buying services to its Web site.

The Stamford, Connecticut-based company has licensed its patented business model to Alliance Mortgage Co. and its affiliates as part of the new Pricelinemortgage service.

Pricelinemortgage is now available in Florida for a statewide beta test. If all goes well, priceline.com plans to roll out the mortgage service to all 50 states.

Priceline.com has been offering name-your-price refinancing and home equity loans through LendingTree and its 80 lenders since February of 1999. However, industry observers believe that by licensing Alliance, priceline.com will be able to broaden the segment of consumer loans it can now target. Last month, Priceline.com took a minority stake in Lending Tree.

Alliance will pay $1.5 million (US$) to license the priceline.com business model, becoming the third company to do so.

Attention Grabber

Priceline.com’s business model has also been catching the attention of many Wall Street analysts lately.

“What’s intriguing about these businesses (priceline.com) is that they defy sizing how big the opportunity could be,” said Lauren Cooks Levitan, a senior equity analyst. “It’s not like you could say, the off line market size is $5 billion, and the best they can hope to get is 25 or 50 percent of the market. In the case of the real game changers — as I like to call them — the opportunities appear to be open-ended.”

Name-Your-Own-Price New Car

True to its image of being open-ended, Priceline.com announced a pilot program earlier this week that was developed for new car buyers from hundreds of dealerships in 10 states including Maine, Massachusetts, New Hampshire, Vermont, California, New York and Florida. Consumers will be able to name their own price for vehicles of their choice via the Internet — without the usual haggling or negotiation.

After naming their vehicle and price, new car buyers will be able choose the counties where they are willing to go to take delivery of the vehicle. To complete the purchase, customers must make a $200 deposit toward the car if priceline.com finds a dealer willing to sell it at that price. The deposit is refundable if the dealer doesn’t deliver the exact vehicle and price the customer specified.

Ample Competition

While some industry observers are definitely optimistic about priceline.com’s latest foray into mortgages and new car sales, they are also being very cautious. Most are quick to point out that there are existing competitors in every category that price.line.com represents. For instance, autobytel.com already sells cars online, Lowestfare.com also makes discounted travel arrangements and Mortgage.com offers a plethora of consumer loans.

About Priceline.com

Founded in 1997 by Jay Walker, priceline.com (Nasdaq: PCLN) struck marketing gold by using actor William Shatner as its ubiquitous pitch man.

In its fiscal year ending December 1998, Priceline.com lost $112 million on revenue of $35 million.

The company, which employs about 141 workers, has financial backers that include General Atlantic Partners and Microsoft co-founder Paul Allen’s Vulcan Ventures.

Yesterday, priceline.com’s stock closed down 1/16 at 75 15/16 per share. Its 52-week high is $165 per share on April 30, 1999, and its low is $53.50 per share on September 13, 1999.