Anyone track Sabre (SABR)?

Sabre is the grandaddy of all online travel systems dating back to 1953. It revolutionized the travel agency business. Unlike most online systems, it focuses on B2B instead of on individual travel and hospitality. Sabre experimented with individual travel through Travelocity.com launched in 1996 but sold it this year to Expedia. As I mentioned in an earlier post, at one time Sabre was part of American Airlines and it became more valuable than the airline’s whole flying fleet. In time Sabre was spun off, taken private and lately re IPOed (April 17, 2014). A brief history:

http://www.sabre.com/index.php/about/our-history

Sabre sells Travelocity to Expedia for $280 million
http://www.dallasnews.com/business/headlines/20150123-sabre-…

A quick look at Yahoo shows that Sabre became profitable in 2014. Revenue, gross profit and operating income are growing slowly (9% & 11%) but net income grew nicely. It could be a one-time income tax event. This needs more research.

http://finance.yahoo.com/q/is?s=SABR+Income+Statement&an…

As a recent IPO I consider the stock to be speculative because I like to see the stock’s price history. The “new” Sabre gives its founding date as 2006 and it has been public for less than one year.

http://softwaretimes.com/pics/sabr-3-31-2015.gif

As I often do with do with speculative positions I like to start with a very small starter position and trade it to increase its size and reduce the cost basis. No position as yet.

Denny Schlesinger

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dont like the balance sheet to start with. lot of the cash flow goes to service the debt. lot of noise in the financials. selling travelocity will make it look good in 2015 for sure.

still cant see buying it

Thanks for pointing out the debt.

Sabre looks like a turnaround situation following a leveraged buyout. Half the assets are goodwill and other intangibles. But the software and the intellectual property are probably carried at zero since “R&D” is expensed (GAAP is flaky a best). They paid off 16% of the long term debt in 2014 and Travelocity, if applied to the debt, would reduce it another 9%.

Definitively speculaive, but interesting.

Denny Schlesinger

Wyndham Hotel Group to Migrate Central Reservations to Sabre Platform
Furthers Wyndham’s strategy of working with leading technology companies to deliver state-of-the-art solutions to franchisees
PR Newswire Sabre Corporation
8 hours ago

PARSIPPANY, N.J. and SOUTHLAKE, Texas, March 31, 2015 /PRNewswire/ – At its Global Conference in Las Vegas today, Wyndham Hotel Group announced to thousands of franchisees that the company has entered into a global CRS services agreement to migrate its central reservations systems to Sabre Corporation’s industry-leading SynXis Central Reservations solution.

http://finance.yahoo.com/news/wyndham-hotel-group-migrate-ce…

Sounds like a serious endorsement!

Denny Schlesinger

Denny,

That’s interesting. I spent most of my career working for AA/Sabre and then EDS and HP primarily on AA/Sabre/US Airways accounts until I took an early retirement two years ago. Sabre (TSG then) was also the first stock purchase (pre-IPO) I ever made when they were spun off from AA in 1996. I didn’t even know Sabre was a public company again or realize/recall that they had sold Travelocity to Expedia. As you may have figured out by now I’m pretty out of touch with the company so I’m sorry to say that I don’t have any great insights to offer.

Steve

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Steve, thanks for the feedback. I’ve been aware of Sabre since one of my consultants worked on a Sabre-like system for an airline in Venezuela – a long time before I started investing. Now that I do invest I scan the news for interesting stuff. Yesterday I happened to find a mention of Sabre in an unrelated article and that got me going. With the WWW and Google it is really amazing what you can find out in a matter of a few hours.

Denny Schlesinger

Hello Captain,

Just some anecdotal info: a friend of mine is visiting who is in town consulting for a new hotel. After intensive investigation into the options for booking online reservations, he concluded that Sabre was far and away the best product and signed up with them this morning. He claims that the economics for their system is compelling. He also spoke highly of a Sabre University (training program) that is included in the
attractive pricing of the product.

Best regards,

Mike

Mike, thanks! That information is highly appreciated. It’s seldom we get that kind of insight into non-retail products.

Denny Schlesinger

I bought some SABR today.

Denny Schlesinger