<B> Tech Stocks Keep Rising</B>
By Mary Ann McNulty
Buoyed by the overall market for anything technological, anything Internet, travel technology companies continued their amazing upward spiral in the first quarter of 1999.
Galileo International Inc. reported a 25 percent increase in first quarter income to $78 million, helped in part by the sale of 12 percent of its Equant, N.V. shares, sold as part of a second offering of that company. Excluding the stock sale, income rose 16.1 percent to $72.3 million.
International bookings rose 9.3 percent during the quarter, due to strong growth in Europe and in several African markets that the company entered last year, said James Barlett, chairman, president and CEO. Total airline booking volumes rose 5.3 percent to 89.7 million. Excluding passive bookings, total airline bookings grew 6.7 percent for the quarter, while U.S. bokings inched up just 2 percent. Car, hotel and leisure bookings rose 4 percent.
Galileo's operating margin improved 1.7 points to 29.9 percent for the quarter and operating income rose 13.7 percent, compared with the same period last year.
Information service revenues dropped 46 percent to $18.8 million for the quarter, as Galileo ended network services to an unnamed airline at the end of 1998. However, the revenues were "almost entirely offset by a reduction in costs for the quarter," for these services, the company said. Overall, revenues grew 7.2 percent to $404 million, while electronic global distribution revenues rose 12.6 percent to $385.2 million from the same period a year ago.
Sabre reported record revenues of $638 million for the quarter, up 15 percent from the prior year's period. Net earnings rose 29 percent to $93 million, due in part to a one-time gain of $21 million from the sale of 30 percent of its Equant shares. Excluding the stock sale, earnings were flat at $72 million and operating income dropped 2 percent to $112 million.
Travel distribution revenue increased more than 10 percent for the quarter, while information technology services revenue jumped almost 23 percent.
Worldwide bookings rose 10 percent during the quarter to 115 million. U.S. direct bookings grew 3 percent for the quarter, partly due to Travelocity, Sabre's online consumer booking site.
Coming close to acknowledging that Sabre might spin off Travelocity, Michael Durham, president and CEO, said, "In light of the need to fund the dramatic growth in this business and the desire to partner with other e-commerce companies, we continue to evaluate the attractiveness of various capital structures for this division."
Separately, Sabre announced plans to build a new corporate campus in Southlake, Texas, in the Solana development along Highway 114 where its Business Travel Solutions unit and several others currently are housed in leased space.
Meanwhile, Dallas-based Pegasus Systems Inc. revenues rose 35.8 percent to $8.4 million, and net income rose to $1.5 million.
"Once again, we reached record levels in transaction volumes for each of our businesses," said John F. Davis III, president and CEO of the hotel booking services provider. "Our initial expectations were surpassed as we saw exceptional growth in Internet transactions, with bookings triple that of the first quarter of 1998."
Pegasus processed 360,000 net hotel reservations from the Internet worth $72 million in sales during the quarter. All of last year, the company processed 750,000 Internet transactions. Its hotel commission processing unit added 2,000 travel agencies to its services during the quarter.
Other travel stocks also reported record revenues and activity. Preview Travel in San Francisco reported that its revenues rose 140 percent to $5.6 million, on gross booking boosts of 114 percent. Still, the company lost $5.5 million for the quarter.
Record activity also was reported for Microsoft Expedia, which hit $16 million in sales for the week of April 4.
The quarter ended with Priceline.com's phenomenal entry into the public market, pricing its stock at $16 per share March 30 and trading in the $120 a share range last week. In early April, market capitalization for this "make me an offer" type system was $12.9 billion.