Charges at Cendant Hurt 3Q Earnings

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Cendant Corp., Parsippany, NJ, last week reported revenue increases for the third quarter, but those gains were wiped out by charges taken for the investigation of accounting irregularities and a severance package for departed chairman Walter Forbes.

Revenue grew 23 percent to $1.46 billion, yet earnings per share dropped 39 percent to 14 cents because of 10 cents in charges. Net income also fell 40 percent to $123.1 million. Adjusted for the charges, EPS rose 20 percent over the same period a year ago to 24 cents.

The alliance marketing division, which generates most of Cendant's direct marketing business, reported revenue growth of 14 percent -- the slowest of its three business divisions -- but saw earnings before taxes, depreciation and amortization fall 60 percent.

As part of a restructuring intended to improve the division's operating performance, senior management changes have been announced. Cendant chief financial officer Michael Monaco has been named chairman/CEO of alliance while alliance CFO Michael Wargotz becomes CEO of the lifestyle unit and alliance chief operating officer John Chidsey becomes CEO of the insurance/wholesale unit.

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