Although the online travel agency beat Wall Street's expectations, its profit still fell 23 percent and the total value of the company's bookings dropped 11 percent decline.

But they also reflect the beginnings of stabilization for an industry battered by economic recession and weakened travel demand, one analyst said.

"We can extrapolate from Expedia's results that industry gross bookings may have begun to slow their rate of decline," said Morningstar analyst Warren Miller.

"However, since most of Expedia's operating income growth came from cost-cutting, it's hard to know how that will translate into the results of other companies in the industry," Miller said.

He noted that the impact of the swine flu outbreak on travel demand is unknown and "may have already affected the consumer mind-set enough to impact next quarter's results."

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