Expedia Inc., the world's largest online travel agency, said Thursday that third-quarter profit fell 28 percent as customers booked directly from hotels and airlines and the company wrote down the value of its ticketing service, Hotwire.

Net income dropped to $59 million, or 17 cents a share, from $82 million, or 23 cents, a year earlier, the Bellevue-based company said. Excluding certain items such as interest expenses, Expedia earned 34 cents, higher than the 30 cents analysts anticipated.

Expedia faces competition from other online travel agencies and the Web sites of hotels and airlines, which are benefiting from strong demand.

Expedia does best when there is an excess of hotel rooms and airplanes seats, which leads to discounted travel, said Howard Deshong, portfolio manager at Bristlecone Value Partners in Los Angeles.

"The hotels prefer to distribute themselves because the margins are better there," said Deshong, who manages Expedia shares among Bristlecone's $500 million in assets. "When business is good, when there's a lot of travelers, the suppliers don't need" companies such as Expedia.

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