12 December 2006

Has Diller lost his touch?

Did Barry Diller and his team miss out on one of the best opportunities to address their issues in a BIG way?

Either someone is asleep at the switch or my judgement is failing me (both are possible!)

So why do I think that Diller should have made the run at Sabre?

Lets agree on the fact that it would make the absolute powerhouse worldwide. Creating a gameover effect across the board. It would probably pass regulatory inspection in the US but would have a hard time in EU. The cost of the 10% buyback is about $6.5 billion+ Sabre will go for less than $5 Billion. The resulting company would not create too big a problem for the technology and reduce the COGS in several areas. It would improve the faltering supply chain relationships and perhaps even make a kinder gentler face. In the newly married Michelle Peluso http://svc.travelocity.com/about/press/0,,TRAVELOCITY%7CBIO_CEO,00.html
it would have a first rate marketing exec. Even Sam could become useful. So a stronger footprint in OTA and a strong supply chain in Sabre plus good footprints in the Hotel and Air channels. This makes a lot of sence. But then nothing is ever this easy.

I suspect it is just bad timing. If this opportunity had presented itself 2 years ago - I am sure that EXP would have jumped at the chance. But now Diller, Dara and Co are running scared. Sure stockholders will get a boost but frankly - the bigger bet would have been to grab significant revenue growth and power across the globe. Can Expedia do it cheaper on their own? Probably but i still think it would have been a better use of the cash pile than resorting to a stock buy back.

Two Thumbs down

Cheers

Timothy

1 comment:

John said...

Well, EXPEDIA cannot be trusted. They are having bad reputation with customers. Even an article in wikipedia mentions that customers complained about several aspect of EXPEDIA's customer service and some hotels and airlines prefer not to do do business with EXPEDIA. Read the article at wikipedia: http://en.wikipedia.org/wiki/Expedia
you cna also click on my name to read about my case