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Sabre: A Well-Rounded Global Powerhouse

The Sabre airline reservation system was launched in 1960 on two IBM 7090 mainframes. It took 400 man-years and $40 million to develop it.

In 1996, American Airlines spun-off the division, which now trades as Sabre Holdings . No question, Sabre is a powerhouse. For the first six months of 2000, the company processed 247 million bookings.

What's more, the company runs Travelocity, which merged with Preview Travel in March 2000. In all, the site has generated $74 million in revenues for the first six months of 2000, which is a 210 percent increase from the same period a year ago.

Sabre has another site, called www.virtuallythere.com, which provides individualized trip itinerary and destination information. The site had 640,000 unique visitors in June.

But this week, the company further enhanced its Web strategy with its purchase of GetThere . Actually, I wrote about this company on August 8, 2000, when the stock price was at $9-7/16 (GetThere: Traveling With Its Customers). With the Sabre buyout, the stock is now $17-1/4.

I think it was a smart move. GetThere develops technology solutions to help companies manage and save money with travel expenses. It is a $28 billion market and so far, GetThere has been able to snag top customers, such as Boeing, Chevron, Cisco Systems, Citicorp, Dell, General Electric, Lucent and Nike. In fact, GetThere provides technologies to major airlines, like United Airlines, America West, US Airways and Swissair.

Interestingly enough, the acquisition will not be a drag on Sabre's earnings. The company announced that it is undergoing a world-wide cost-cutting initiative, which will mean about 1,200 layoffs. Annual savings are expected to be $100 million, starting in 2001.

With its fast-growing Travelocity.com and GetThere divisions, as well as the cost-cutting, expect Sabre to show nice results over the next few years. Also, the company expects to land more outsourcing projects - which should further accelerate the growth rates.