Cendant Profit Rises 19%, Beating Estimates
Cendant Corp. said its third-quarter profit rose 19% on higher revenue from Ramada hotels and other travel-related businesses and from its real estate businesses, including Coldwell Banker and Century 21.
The company said earnings for the quarter rose to $203.9 million, or 24 cents a share, a penny higher than analysts expected, as revenue rose 23% to $1.46 billion.
Cendant, created by the merger of HFS Inc. and CUC International last December, has been fighting to rejuvenate its business since April, when it disclosed what it said were several years of accounting irregularities at CUC. The irregularities forced Cendant to restate its profit for the last three years.
The latest quarter’s profit growth was driven by the former businesses of HFS.
The results exclude charges of 6 cents a share for the investigation of accounting fraud and for the severance package of former Chairman Walter Forbes, who left the company in July.
Also excluded were charges of 4 cents a share for write-offs of investments in an Internet grocer and a poetry publisher. The year-ago results excluded a gain of 3 cents on the sale of 80% of Avis Rent a Car Inc. Cendant still owns the rights to the Avis brand name and licenses it to Garden City, N.Y.-based Avis Rent a Car.
Parsippany, N.J.-based Cendant also took 1-cent-a-share loss for the latest quarter from its discontinued Hebdo Mag unit. The various charges resulted in net income of $111 million, or 13 cents. Cendant agreed in August to sell Hebdo Mag, for $410 million, to a group led by some Cendant executives.
Henry R. Silverman, Cendant chairman, president and chief executive, said restructuring of the former CUC businesses should lead to “significant improvement in future periods.” He predicted the company would report a profit for the fourth quarter.
Cendant stock rose 44 cents to close at $13.88 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* CNA Financial Corp., the second-largest U.S. business insurer, said its third-quarter earnings fell 33% to $81 million, or 43 cents a share, well below the average estimate of 51 cents, as Hurricane Georges and other storms led to a surge in claims. Catastrophe losses soared to $43 million for the quarter from $2 million a year ago. The industry overall is liable for $3.7 billion in weather-related claims for the third quarter, about seven times the year-earlier total. CNA is 85% owned by Loews Corp.
* Aetna Inc., the biggest U.S. health insurer, said its third-quarter profit fell to $152.2 million, or 96 cents a share, citing costs to fix its so-called year-2000 computer software bug. Excluding year-2000 costs, Aetna said it would have earned $188.7 million, or $1.21 a share. Analysts were expecting 95 cents a share. Revenue rose 17% to $5.44 billion. The company has worked to hold down medical costs at its indemnity and managed-health-care division while raising the premiums it charges customers. Aetna also provides investment and pension services.
Aetna said it now expects spending to fix the year 2000 problem to total $110 million after-tax this year, up from its estimate of $95 million, and $85 million next year, up from an estimated $44 million.
* Equity Office Properties Trust, the largest office property owner in the U.S., said third-quarter earnings more than doubled to $171 million, or 61 cents a share, from $74.8 million, or 45 cents, a year ago, as it benefited from higher rents and about $8.5 billion in acquisitions since going public in mid-1997. Revenue soared 138% to $436.9 million from a pro forma $183.9 million. The results for Equity Office, whose chairman is billionaire Sam Zell, beat analysts’ average estimate of 58 cents.
* Learning Co., maker of educational computer software, said third-quarter profit more than doubled to $38.4 million, or 37 cents a share, a penny higher than the average estimate, as revenue climbed 50% to $212.7 million. Learning Co. closed on its purchase of Broderbund Software Inc. in August.
* Paging Network Inc., the world’s largest paging company, reported a third-quarter loss of $16.4 million, or 16 cents a share, smaller than the 20-cents-a-share loss analysts expected, although there was a decline in subscribers as the company focused on more lucrative customers and restructured its operations. Paging Network lost $29.4 million, or 29 cents, in the year-earlier period. Revenue rose 14.2% to $246.8 million.
* Reckson Associates Realty Corp., one of the nation’s largest owners of office and industrial properties, said third-quarter earnings rose 40% to $25 million, or 52 cents a share, 2 cents higher than estimates, as revenue jumped 81% to $67.9 million.
