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Investors Fear Long Wait As Hertz Problems Rise

Hertz Global Holdings Inc. has had a torrid year. Yesterday it said earnings are expected to be well below its previous forecast, in part due to costs related to an accounting error.

On top of that its business is hit because of recalls of GM cars, which make up majority of its fleet. That has resulted in shortage of cars, and the company is not able to take full advantage of an improving economy which would mean higher demand for car rentals. The stock was down 0.68% in early trading.

And now the management has one of the most outspoken activist-investors to answer to. Carl Icahn said yesterday he had bought a 8.48% stake and might seek seats on the board.

Investors think Hertz will take a while to get over the problems that have dragged the company.

Shareholders have been dissatisfied with CEO Mark Frissora. Fir Tree Partners, a hedge fund with 3% stake in the company, said Frissora should step down, holding him responsible for the accounting and management mis-steps that have affected the stock.

Hertz had said in June that it found errors in its reported accounts and might have to restate earnings from 2011 through 2013. It might need to spend more than expected for an accounting review to fix the errors.

Hertz is also facing issues regarding installation of new systems to integrate Dollar Thrifty, a rival it had acquired in 2012 for $2.3 billion. Hertz said in a statement yesterday that it welcomed dialogue with its shareholders, was implementing new procedures and controls, and had made “important additions” to its accounting and finance teams over the last few months. No details have been released on these procedures and controls.

Some investors say they have waited long enough.

Follow @anirvanghosh on StockTwits.

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