Wow, looks like the interest here in this stock has doubled in the last few days. I bought around 31 last fall with the intention of holding for a year or so then reevaluating. Sterling Commerce (SE) was the other stock I considered, so that gives me an opportunity cost for choosing TSG. I was looking for a good electronic commerce play and both seemed poised to take advantage of EC growth in 98. I stayed on through the earnings problems and am glad to see it setting new highs.
SABRE's revenues break down relatively evenly (last I checked) between IT outsourcing, online ticket sales, and commissions from travel agent sales. From press releases and other company news it appears they've got a lot of new business in IT outsourcing. The biggest disappointment, IMHO, is their lack of vision/desire in aggressively developing the online business. I think this is the business they should really develop.
When I bought the stock I thought they were well positioned to take the lead in one segment of consumer electronic commerce, much like Amazon.com did for book retailing. Look where Yahoo and Amazon.com were one year ago in stock price, product maturity and mindshare. Granted SABRE was lower risk than the others (they actually had history of +ive earnings) so I shouldn't expect as large a return. Their big problem is that if they aggressively develop the online Travelocity/EasySABRE brand they will necessarily alienate the travel agent network that brings in a steady stream of revenues. This gives some perspective to their reluctance to move forward.
You asked for the bearish side and that's my take on it. Another note, they are focused on a single vertical market. As an IT company that produces steady revenues from outsourcing and multiple distribution channels, I think they are fine. If you're looking at them as the next hot internet thing, with commensurate growth, you may want to reconsider. Spinning off the Travelocity site/brand would be an interesting topic for additional discussion. |
