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Non-Tech : Cendant Corporation (NYSE:CD) -- Ignore unavailable to you. Want to Upgrade?

To: VALUESPEC who wrote (217)	4/17/1998 1:10:00 PM
From: Thomas C. Donald	Respond to of 3627

Here is an extract from a news article today on Cendant. The accounting issue seems to relate to timing. If 1997 financials are restated to postpone recognition of some earnings, then 1997 earnings would be less and 1998 earnings would be more. However, accounting procedures would also be revised for 1998, making the effect on 1998 essentially a wash. In a like manner, if all of CUC's financials were restated beginning some years back, then even 1997 earnings might be relatively unchanged. Thus, it might turn out that there is a negligible effect on both 1997 and 1998 earnings. Whatever the case, this whole issue might simply be a tempest in a teapot. "Investors who have spoken with the company say the heart of the problem appears to be how the CUC business booked its revenue from some club-membership sales and how it handled the expenses associated with marketing to those members. Cendant executives and financial filings say that the cost of bringing in a new club member is about equal to the first year's membership fee. In its filings, Cendant says it spreads out costs for things like postage, printing, and publications over a period of one to three years. That's fine under generally accepted accounting standards, so long as the company also spreads out when it claims the revenue, said Jack Ciesielski, accounting specialist. But, the investors say, CUC appears to have been booking too much revenue up front, and deferring the expenses to future periods, thereby easing the sting to earnings."

To: VALUESPEC who wrote (217)	4/17/1998 1:26:00 PM
From: Nick	Read Replies (2) \| Respond to of 3627

Valuespec, if you compare MSFT to CD, you are a bigger fool thank you look. As far as not having to worry about real estate, you are right in that the concept is great. But what you fail to realize is that there are limitations on how you can keep on cheating your franchisees and stockholders. Silverman keeps on conning his franchisees by scaring them. If they complain about his management style, they fail their inspections even though their property would be in great shape. If on the other hand, they kiss up, they get passing scores even with a substandard product. If you ever stay at any of his hotel brands, you will notice that the directory states that the hotel is of the highest standard, while the room looks like a tornado hit it. Didn't you read the front page WSJ article a couple years ago about Days Inns. Look at "CUC TRAVEL": You pay $69 to join, get a minimum discount of 10%, the hotel pays a 10% "travel agent" commission, and then pays Silverman his 10% royalty fee. These Hotel operators are afraid to do anything about it because if they get lower scores, their lenders might get upset. But soon, they will wake up and realize that they are being conned. When that happens, you will see a class action suit by these franchisees, and a break up of CD. You can't hold a gun to your franchisees head forever. Sooner or later, they will gang up on you. Look at AVIS, and it's discrimination problems. Silverman should have done his DD before buying it, instead of trying to fix it later. His realty chains are doing well, and will probably continue to do well. His ABI purchase is probably in jeopardy. If he is successful in the acquisition, he'll pay a higher price, and it won't be as profitable as it would have been if the deal was completed last week. In short, this house of cards won't last long. If you want to buy his hype, good luck to you.