Priceline Launches Internet Phone Service

Name-your-own-price company Priceline.com (Nasdaq: PCLN) announced on Thursday that it will offer long distance telephone service through an agreement with several Internet Protocol (IP) telephony industry leaders.

Net2Phone (Nasdaq: NTOP), Deltathree.com (Nasdaq: DDDC) and ZeroPlus.com (Nasdaq: ZPLS) will participate in the telephone plan, which is being launched today with a nationwide TV campaign featuring actor William Shatner.

All three phone companies provide phone service over the Internet, though the calls are made from regular phones. “As a fast-growing segment of the telecommunications market, IP telephony now has the technology, quality and reliability to attract broad consumer and small business appeal,” said president and CEO Daniel H. Schulman.

Priceline Long Distance will receive “multimillion-dollar (US$) participation fees” from the service providers, the company said.

Small Businesses Courted

Priceline said consumers and businesses can save up to 40 percent on their phone bills by going through the site. Priceline Long Distance promises no surcharges, hidden fees, membership costs or minimum call times.

The service will also offer features aimed at small businesses, such as real-time billing information, authorization codes for multiple employees, and automatic dialing.

American Express Partnership

In a separate announcement, Priceline said that it has formed an alliance with American Express (NYSE: AXP) to target small businesses through a new business-to-business (B2B) Internet portal under development by Priceline.

As part of the three year, multimillion dollar deal, American Express Small Business Services’ cards and credit lines will be the “premier” payment systems accepted at the new portal, with American Express customers receiving special discounts.

The long-distance telephone service will be the first product offered through the new site, which Priceline says it will launch later this year.

“American Express is an ideal partner for Priceline.com and our B2B portal,” said Schulman. “We expect that this alliance will enable Priceline.com to rapidly establish its B2B market position and ultimately offer a robust collection of valuable B2B services.”

Analysts Pleased

Priceline shares climbed Thursday, trading up 4 5/8 at 41 1/8 early in the session, though they were still near a 52-week low, battered by concern about the outlook for profits at e-commerce companies. The company recently reshuffled its management, with Schulman taking over the presidency from Richard Braddock, who remains chairman.

Wire reports said analysts at two brokerage firms repeated favorable recommendations on Priceline shares following news of the American Express and telephone pacts. Jamie Kiggen at Donaldson, Lufkin & Jenrette reiterated a buy recommendation, while Greg Konezny at U.S. Bancorp Piper Jaffray repeated a strong buy, the reports said.

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