Where do former CUC accountants wind up finding
Just got back from lunch break during which I heard
media report about Clinton and Republicans battling
over how to spend Federal Government surplus. You know
that surplus created by sliding over all those Social
Security trust funds into the budget revenues ledger.
Just stuck me as amusing that it had to have been
these same guys doing the CUC accounting...
Did you make a mistake? JD thinks that in 2 years
we'll have $3 billion in cash flow but only $1 EPS. If
so, why would the stock trade at 40X - 45X
Also, if you are correct, what does JD think EPS will
be for '98 & '99? Assuming 20% growth (which may not
be accurate), is he suggesting that we now (for FY
'98) have EPS of less than 70 cents per share? That
would imply EPS for '97 of less than 60 cents per
share, meaning that he foresees more major restatements
I think you must have a typo on the $1
EPS. If not, no way will this be a $40 - $45 per share
stock by then.
I posted a few days ago about the biggest
positive for CD. I think that a buyout or merger with this
stock is a real possibility. With the recent press that
the LBO funds (KKR, Forstmann Little, etc) have been
getting about nothing to buy and too much money to throw
at things, I believe that these companies might take
a keen look at CD.
First of all, let's face
it: CUC is a big pile of crap. So, basically the idea
is to buy the company, sell CUC for what you can,
oust the board (including Forbes), possibly keep
Silverman around (maybe not). Then, you have gotten rid of
a lot of your problems: CUC is divested, the
world's worst board and Chairman are gone, and the
company is taken private, where you don't worry about the
stock price for a few years, giving yourself enough
time to get the "synergies" and cross-marketing things
going. Then, in about 3-5 years, you take the company
public again, investors have forgotten about all of this
crap, and the LBO firms make out like bandits.
Folks, in my opinion, this is becoming a very likely
scenerio, and may explain why this stock isn't in the
single digits yet. I would keep an eye out for SEC
filings (13D) for someone buying up > 5% of the
As a takeover play, this stock has
potential. As a growth stock, until you get rid of the dead
half of this stock, I don't see much potential.
John Dessauer, one of Wall Street Weeks top stock
pickers recommended CD at 23 a few weeks ago when the
stock took a drop. This past Tuesday(July 14, 1998)John
had a special hot line update on CD for his
subscribers. In summary he stated that CD has a strong and
vibrant balance sheet and has positive earnings. CD also
has scores of valuable business which, if necessary,
could be sold off to raise cash. He believes that
Walter Forbes' days are numbered and that he will be
forced out either by the board or by the the
stockholders putting pressure on the board. Silverman has
clearly been embarrassed and moreover he has lost his
fortune. All his stock options are now worthless at this
price. Dessauer believes that in two years the company
will have $3 billion in cash flow and earning over a
$1 a share. If those figures come about the stock
could be at $40-$45 a share. Silverman wants to deliver
to the shareholders and wants his reputation and his
net worth back. Thus, he has to make CD go back up.
Dessauer who is a shrewd stock picker and has done fine by
me says to use this sinking spell to accumulate more
what elese could cendent not report. Think that
they would be very careful from here on in, as they
could get delisted very quickly if sec looses
confidence in the rest of the management team.... Just
Leave it to the analysts to figure out how to
make more M&A fees on this debacle.
following this board, I cannot believe how little attention
is being paid to three years of inadequate audits.
Methods of recognizing revenues and proving them is the
one part of an audit or due diligence that you don't
mess up, not to mention other out and out errors.
Maybe this is a great case study on the value of
unqualified opinions in annual reports. Let's hear it for the
Also, cannot help wondering how
many of the CUC Board members have been on the audit
committee all of these years. What did they think their
role was???Hope all of the CUC directors have great
Based on no changes to the CD structure and
personnel, and an audit that will state what is now known.
How far will CD slide from now until
Please provide some basic support for your values, and
any caveats to what might change your guess.
am projecting that based on:
no technical "buy"
an at-risk management team
earnings on 98
$1.00 - $1.04
earnings in 99 only $1.14 -
CD price will could drift to 12-13 and will
re-settle between 14-15 until there is any positive news.
But with the market at records highs, I could foresee
any potential jump from positive news (non-negative
counts also) could be offset by market correction in
August. Therefore this could be dead money. I do not
foresee Sunbeam prices because CD will show profit, but
market cap to revenues of 1:1 like SOC would bring CD to
CD's industry is not my professional area of expertise
or focus and therefore have little to benchmark
against, but on a personal level I am interested in the
I believe your earnings estimates are on the low
the latest ive seen is about 1.08 for 1998
1.28 to 1.30 for 1999
P/e for 1998 is
P/e for 1999 is about 11
Rest of s&p 500 is
FAIR value for Cendant is around 28 a
Im measuring that two ways..
first by price to
earnings to be equal with its peers.
the merger both were trading around 18 a share. Or a
combined value of around 36.
We now know 50% to 60% or
so of CUC was bogus so basically take half off of
their 18..making that nine.
HFS is fine..so take
their 18..and the 9 CUC is worth..That puts us at 27.
So..both these measurements put us in the same
Discount some for the fear factor..and this range is still
Remember..we have double audited
books coming out also.So the numbers should be
Cendant has better high growth products than sunbeam..and
The 14 range to me seems like
a pretty dam good bet for a bottom.
bounce around there..little lower..and higher..but I
think it will find support at that