Interestingly enough, part of Microsoft has already been split-off. It is in the form of a tracking stock called Expedia, an online travel site. Like all other Internet stocks, though, Expedia is well-below its high. The stock now trades at $15-5/8, with a 52-week high of $65-7/8. At a $692 million market capititalization, Bill Gates could buy this company with some of his pocket change.

A concern with Expedia was its cash position. But on reflection, this does not make much sense. Microsoft owns 70% of Expedia. It would tarnish Microsoft's reputation to allow Expedia to sink. This is why yesterday Expedia raised $60 million from Microsoft and Technology Crossover Ventures.

But even though Expedia has plunged, the market capitalization has been enough to make two strategic acquisitions. Those include Travelscape.com and VacationSpot.com.

Expedia has also been refocusing. Instead of relying mostly on airline ticket sales, the company has been shifting revenues towards high-margin lodging and vacation-package transactions. In the past quarter, commissions were less than 30% of revenues. What's more, with the Travelscape.com acquisition, Expedia is using a merchant transaction model; that is, negotiating deals directly with suppliers. This allows for better pricing to the consumer, as well as better margins for Expedia.

Expedia is translating its actions into results. In the past quarter, revenues were $58.8 million, which was a 212% increase from the same period a year ago and a 33% sequential growth rate.

Expedia has put much work into developing a highly useful site. The company is vigilant about customer feedback. Actually, Expedia.com has won a variety of awards, such as from Yahoo! Internet Life and Gomez.com (ranked #1 by both).

True, there are threats, such as from the airline industry. Several major carriers are creating a new site called T2. But its success is in doubt. First of all, there are antitrust concerns. Next, it is often difficult to have fiercely competitive enterprises team-up on such ventures. Finally, it may be awkward for the airlines to allow for price comparisons among different carriers.

Keep in mind that travel sites are seasonal. Large amounts of business come in the summer months. So with Expedia's new focus and cash cushion, it is safe to assume that the company should benefit nicely from a boost in business in the next few months.