Expedia slashes stock buyback plans

SEATTLE - Shares of Expedia Inc. plunged Monday after the online travel agency said it would curtail stock-buyback plans because of a lack of financing on acceptable terms.

The Bellevue-based company's stock sank $2.68, or 9 percent, to close at $26.71.

In June, the company that operates announced it would buy back about 116.7 million shares, or about 38 percent of its outstanding stock, a move that sent shares up more than $4 to above $29 per share.

Expedia said it will now plan to use existing bank credit to buy back 25 million shares, or about 8 percent of shares outstanding, for $27.50 to $30 per share in a modified Dutch auction.

The company cited "current conditions in the credit markets" for the decision.

With an eye to the troubled subprime mortgage market, lenders across the board have reacted by raising interest rates or finding other ways to reduce risk, making it more expensive for companies like Expedia to borrow.

Expedia.com is the top travel site in the extremely competitive U.S. market, but lags Inc. in Europe, where there is more potential for growth, according to Piper Jaffray analyst Aaron Kessler.

yahoo.com/