Priceline – Is It the Car or the Driver?

Priceline seemed to be back on course, steering delicately toward profitability for the first time. The recent news from the Norwalk, Connecticut-based e-tailer was, for a change, mostly good. The days of the class action suits and massive layoffs and failed expansion ideas were fading in the rearview mirror.

So what does the board of directors do? Toss the driver out of the moving vehicle, of course.

What’s troubling about the move, aside from the bizarre timing — which is a big question mark itself — is the lack of a reasonable explanation.

To its credit, Priceline did not try to sugarcoat or overspin the ousting of chief executive officer and president Daniel Schulman with the usual lines, such as “to pursue other interests,” which always makes me picture an old guy hunched over a work bench tying trout flies.

Instead, the Priceline platitude this time is that the executive switch was made in order to focus on the best interests of the company, given the progress made in its “turnaround plan and drive to profitability.”

Huh? Let me see if I got that right. Schulman’s hand was on the steering wheel when Priceline found the high-speed lane again. He was driving during the company’s best quarter ever in terms of operational finances.

So now’s the time to change drivers so the company can continue on that same path?

Some Explaining

That explanation is, well, not an explanation at all. At least not for this situation. That statement might fit if the company had suddenly reversed course and wanted to get once-and-future CEO and current chairman Richard Braddock back in the driver’s seat to fix the bearings.

Braddock himself tried a different tactic. The old organizational flow approach. He told the New York Times that the board thoughtit was “more logical” to have the same person be chairman and CEO.

“As we moved through our turnaround plan, we had different management needs than we had in the past,” Braddock reportedly said.

Daniel in the Middle

Schulman, meanwhile, made the whole thing sound mutual, but how can it be? In fact, his statement to the New York Times makes it appear as if he did not get the memo about the company needing fresh hands on the controls.

“We took this thing from the brink and brought it back,” Schulman reportedly said, which tells me that he thinks he had at least some role in Priceline’s turnaround.

Given that, why wouldn’t Schulman be the right person to have when the turnaround effort starts to pay dividends — both literally and figuratively?

Smoke and Mirrors?

The fact is that after a barrage of bad news, Priceline has been on a decent little run. Its stock price has actually scratched its way above the US$5 per share level. Not exactly the $60 level where it sat almost a year ago, but a lot better the $1.06 where it bottomed out in January.

Of course, much of the boost has come from external forces, including the operating profits being turned in by rival online travel sites Expedia and Travelocity.

Excellent Driver

Could it be that Priceline does not need a new driver at all, but rather is in dire need of a new car?

The name-your-own-price e-tailer has all but taken its original business model apart and put it back together again. All that time spent on groceries and gas clubs, and the plans for insurance and all the rest, slowed the vehicle down quite a bit.

Rolling Downhill

Now the car has some momentum — or at least the appearance of momentum. Did Priceline really turn the thing around and as Schulman said, bring it back from the brink? Or is Priceline drifting like a lazy bicyclist.

If the power is coming from outside only, Priceline is in deep trouble. And it isn’t going to matter who is driving.

Next time, Priceline should consider a tune-up instead of a new man in the front seat. Or, at the very least, have a good explanation ready for why the driver had to go when all signs point to smoother travels ahead.

What do you think? Let’s talk about it.