Online travel agency Expedia Inc. said Tuesday quarterly net profit rose, but shares fell as much as 10 per cent as adjusted income fell short of expectations.

"It's just that expenses were higher than expected, and they missed consensus on the bottom line," said Marianne Wolk, an analyst at Susquehanna.

Operating expenses were mostly higher, with the biggest increase in selling and marketing costs, up 10.6 per cent.

The company reporting total bookings of $5.02 billion, up 8 per cent from the first quarter of 2006. European bookings grew 32 per cent.

Expedia and rivals such as Priceline.com Inc. have been making inroads into European markets, where online travel bookings lag behind the United States. The companies also have set their sites on budding Asian markets.

"With accelerating transaction growth, a 32 per cent increase in European bookings, 11 per cent revenue growth and the very beginning echoes of resurgence at Expedia.com we are seeing the early results of the reinvestments and reorganizations that made last year so challenging," said Expedia chairman Barry Diller in a statement.

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