Cendant Corp, the scandal-hit direct marketing company, plans to sell off its consumer software division, which has been recording astonishing revenue growth rates and is on target to increase revenues to well over $500m this financial year. Figures released by Cendant yesterday show that second-quarter software revenues leapt 157% to $130.5m bringing the midterm total to $226.3m, 97% above the same period last year. Significantly, despite heavy investment the software division is struggling to break even and in the first half software suffered a $19.3m loss. Cendant owns leading consumer software brands such as games developer Sierra On-Line, multimedia educational and entertainment outfit Davidson & Associates, games developer Blizzard Entertainment and Knowledge Adventure, which specializes in educational software. It also runs World Opponent Network, a free internet games site. In a bid to placate investors, Cendant has asked Credit Suisse First Boston to analyze strategic alternatives with either a 100% IPO of the software unit or its sale to a third party. Henry Silverman, Cendant Chairman, President and CEO says the software efforts do not fit within our future business model. This signifies a major turnaround in the company’s approach, as in April this year Cendant joined in a $10m round of funding for hot start-up ShareWave Inc, which is working on wireless technology to connect PCs, TV sets and other home appliances. Cendant, created last December by an $11bn merger of HFS Inc and CUC International Inc, has been forced to restate its figures after the discovery of what it and its auditors refer to as accounting errors made with an intent to deceive. Both the Securities and Exchange Commission and the United States Attorney’s office are conducting an investigation.
