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Technology Stocks : The Learning Company (TLC)
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To: Not a Short who wrote (5305)8/14/1998 3:53:00 PM
From: Obewon  Read Replies (1) of 6318
 
<< Don't you think that Cendant will get split into several pieces?>>

No, I don't think it will be. Current market trends are pushing toward consolidation across the various consumer software industries (productivity, education, entertainment, etc.) due to the similar distribution channels. While entertainment software industry may resist this trend for awhile due to to high level of creativity needed in the industry, even it benefits from having lines of business which don't see such wild fluctuations in cash flows.

The Cendant software group is "supposedly" one of the lines of CUC's business which is not tainted by the current accounting scandal. However, Cendant needs the cash to be able to finish its American Banker deal. Price for the software business is currently at a discount (I read a $1.2B price tag recently) considering it cost CUC more than that to assemble all the pieces over the past three years. Timing issues require Cendant to sell relatively quickly while the taint of scandal still covers the business so any buyer is going to get solid assurances and full disclosure of finances and accounting BEFORE the purchase.

BTW: There will be no feeding frenzy over the division. There are only a couple of eligible buyers and TLC is not one of them (for anti-trust concerns).

OB
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