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Online Travel, Other Tech Giants Set Sights On Cuba

As President Obama stands beside Cuban President Raul Castro in Havana and brokers historic talks to thaw relations between the two countries, online travel giants and other Silicon Valley titans have set their sights on building businesses on the island nation. The $8.4 billion tourism industry is likely to swell once Washington allows general tourism to the island nation. For now, a license from the Treasury Department is required for legal travel to Cuba, but the online travel kings have been quick to strike deals to build sales to that nation. Still, online travel firms shouldn’t expect any big returns on their efforts for three to five years, says Douglas Quinby, an analyst with travel research firm Phocuswright. “But once all the ducks are lined up, I think you’re going to see a lot of interest for U.S. travelers,” Quinby told IBD. “It’s a huge Caribbean destination, it’s got great beaches and sun.” Online travel giant Priceline ( PCLN ), via its Booking.com platform, already is setting up shop in Havana and allowing U.S. citizens to reserve and pay for rooms at Cuban and foreign-owned hotels. “Members of our leadership spent many weeks working hand in hand with the Cuban government and tourism authorities, hotel partners, and banks to ensure that when we launch a few weeks from now our customers will experience the secure and seamless service they’ve come to expect from Booking.com,” Todd Dunlap, managing director of Booking.com Americas, told IBD via email. Expedia ( EXPE ) is working on getting travel to Cuba online as well — though it did not share a timetable or a specific date that bookings could begin. “We currently have a team working across multiple channels to help enable U.S.-to-Cuba travel, taking every step to ensure that the solutions align with the laws governing travel between the countries,”  company spokeswoman Sarah Gavin said in an emailed statement. Privately held Airbnb has been operating in Cuba for a year, and is available to U.S. citizens in Cuba. The San Francisco-based firm lets travelers rent homes, rooms in homes and apartments. According to an Airbnb blog post , U.S. visits to Cuba rose 77% in 2015, to 161,000. The company says it’s working closely with the Cuban government. TripAdvisor ( TRIP ) spokeswoman Julie Cassetina told IBD via email that the company is “now displaying hotel metasearch for Cuban hotels” on its website, but she declined to make executives available for an interview. Silicon Valley Heads To Havana Outside of the online travel agency kings, the tech contingent included IBD Leaderboard stock PayPal ( PYPL ). In a blog post Sunday, PayPal CEO Dan Shulman outlined his case for targeting Cuba. The major cash cow for the firm is likely to be in assisting Cubans who receive money from sources in the U.S., an influx which at the moment, according to the blog , accounts for $2 billion, or 3%, of the Cuban economy each year. It’s a chance for PayPal to expand the reach of its Xoom subsidiary, which handles international transfers. PayPal bought Xoom for $890 million in July 2015. The blog also makes the pitch that PayPal plans to find ways to attract Cuban small businesses — which at the moment are mostly not set up to process credit and debit cards. Privately held Stripe, which competes with PayPal payments-processing subsidiary Braintree, also made the trip to Cuba. Stripe  said in a blog  that it would start offering Cuban businesses the ability to set up bank accounts and incorporate in the U.S. On the trip, President Obama said Alphabet ( GOOGL )-owned Google would try to help ensure that Cubans have access to broadband Internet, which remains scarce, especially outside of large cities. “We know, from the experience of many countries around the world, that new technologies and improved internet access can help people in their daily lives, provide new information and experiences, and help harness a country’s creativity and ingenuity,” Brett Perlmutter, the Cuba lead for Google Access,  wrote in a blog post Monday. “We hope to have the chance to offer more services to the Cuban people in the future.” Xerox ( XRX ) CEO Ursula Burns also attended the trip in a fact-finding capacity. “Recent changes in U.S. regulations may afford new commercial opportunities in Cuba,” Burns told IBD in an emailed statement, “but the parameters of those opportunities are not always obvious. The U.S. government has worked hard to describe what the recent changes mean. I think part of my job on this trip is to evaluate what they mean in light of the economic realities here in Cuba.”

Q4 Earnings Beat For Chinese Online Travel Firm Ctrip.com

Leading Chinese online travel agency Ctrip.com beat Wall Street estimates in Q4 but missed on Q1 guidance, sending the stock down Thursday. Fourth-quarter revenue jumped 50% from a year earlier to $444 million, the company reported , ahead of analysts’ average expectation of $438 million, in a Thomson Reuters poll. “Our philosophy is to underpromise and overdeliver,” Ctrip.com Chief Financial Officer Cindy Xiaofan Wang said. “It was another very strong quarter and it concludes the exciting year of 2015.” Earnings per American Depositary Share on a GAAP diluted basis were 3 cents, or RMB 0.19, better than the slight loss expected in Thomson Reuters’ analyst poll. ( Excluding share-based compensation charges (non-GAAP), Ctrip’s diluted earnings per ADS were 11 cents for the quarter.) Ctrip shares were down 0.4% near 42.50 in afternoon trading on the stock market today , after diving as low as 39.52 in the morning. Ctrip.com has an IBD Composite Rating of 84, where 99 is the highest. Ctrip.com guidance for the current quarter misses the average view of analysts polled by Thomson Reuters. In a statement accompanying the earnings results, the company said its top line would grow between 75% and 80% in Q1 2016, “reflecting the consolidation of Qunar’s financial results.” Goldman Sachs analyst David Jin called the Q1 guidance “soft” but maintained his buy rating with a price target of 55. A Ctrip share trade in October with Chinese Internet company Baidu ( BIDU )   gave Baidu a greater role in the online travel industry, as China Internet companies position for growth from the online-to-offline, or O2O, services niche. The share-swap deal gave Ctrip.com a larger stake in  Qunar Cayman Islands ( QUNR ), which also reported earnings on Wednesday. Qunar stock was up about 1.9% near 36.20 in afternoon trading Thursday. “The deal will help the whole industry have a chance to achieve long-term profitability,” Xiaofan Wang said. “In the past, competitors have lost tons of money to compete for market share.” Alibaba Group ( BABA ) and Tencent Holdings ( TCHEY ), which reported earnings Thursday morning , have become early players in that field. American online travel giants such as TripAdvisor ( TRIP ) and  OTA giant Priceline ( PCLN ) assuaged Wall Street’s concerns about a slowing global economy — neither firm reported a material impact from the signs of a slowdown. Though rival  Expedia ( EXPE ) missed Wall Street expectations for Q4, the company’s executives also said they were not seeing a slowdown — but the strong dollar has continued to weigh heavily on its results. That may change in the future, Expedia executives said. RELATED:   3 Chinese Internet Stocks Make Moves After Earnings .

Google And Alphabet Better Take EU Android Probe Seriously: Analyst

Alphabet ( GOOGL ) unit Google has lots to fear from the European Union’s investigation into its Android unit, said investment bank Monness, Crespi, Hardt & Co. in an industry note Wednesday. “The EU’s moves should not be taken lightly,” wrote Moness, Crespi analyst James Cakmak, adding, “The latest string of developments from the EU’s antitrust boss, Margrethe Vestager, suggests a formal complaint to Google may be underway.” The EU is investigating Google on charges related to Android, said Cakmak — in particular, about whether the company required smartphone makers and others to bundle or otherwise include Google apps and services in their products. He said that required bundling is a big threat, “especially when considering it is Android which allows Google services to proliferate on the mobile ecosystem. Unbundling hinders the ability (of Google) to collect data and targeting.  The case will likely end up in court with appeals, but it shouldn’t be taken lightly.” The EU is investigating Google’s Android system following complaints, including those from a group representing Microsoft ( MSFT ), Expedia ( EXPE ) and Nokia ( NOK ), according to media reports. The European Commission said in a statement last year that it was investigating whether “by entering into anticompetitive agreements and/or by abusing a possible dominant position, Google has illegally hindered the development and market access of rival mobile operating systems, mobile communication applications and services in the European Economic Area.” The EU’s challenge to the Google Android operating system followed a formal complaint filed last year that focused on Google’s comparison-shopping service. The commission had charged that Google favors its own shopping-comparison service in its search results. Google faces fines that could exceed $6 billion or injunctions that restrict how the company operates in Europe. EU Has Tightened Privacy Laws EU officials reached an agreement in December to replace a patchwork of digital privacy legislation with one standard law covering the entire EU to govern how companies can use individuals’ personal information. After nearly four years, negotiators agreed in December on a final text of an EU-wide provision to replace 28 different national privacy laws and boost financial penalties for companies that violate the new provision. Europe has been more concerned about digital privacy than the U.S. Google stopped adding to its Street View footage in Germany years ago, amid government objections there. A European “right to be forgotten” has forced Google and others, upon citizens’ requests, to drop links to information about them that’s available publicly elsewhere online. Europe, which lacks major consumer Internet companies, has also gone after Internet companies — especially Google — for alleged market abuses. Alphabet stock was flat in midday trading in the stock market today , near 750, but it’s up roughly 30% in the past 12 months.