February 11, 2002
Cendant corp. Writes off investment in Homestore
Inman News Features
Cendant Corp. (NYSE: CD) has written off its remaining investment in Homestore (NASDAQ: HOMS), according to a Jan. 31 statement on Cendant?s Web site that provides additional accounting information about the company?s affiliated entities./
"The carrying value of the company's investment in Homestore.com has been written down to zero due to the recent market decline in Homestore.com shares and the company's equity share in the losses of Homestore.com," Cendant stated.
The statement didn?t disclose how many shares were still on the books at the time of the write-off. But Cendant?s financial results for the fourth quarter of 2001 announced this week included an after-tax non-cash charge of $285 million, or 29 cents per share, related primarily to Cendant?s Homestore investment.
"This impairment was caused by a substantial reduction in Homestore?s market value and the resulting investment write-off substantially offset the gain recognized in the first quarter of 2001 on the sale of move.com to Homestore," the company?s report stated.
The financial report also noted an after-tax loss of $21 million, or two cents per share, related to Cendant?s proportionate ownership in Homestore.
Cendant?s original investment in Homestore was put on the books a year ago when Cendant?s sold its Move.com business to Homestore in exchange for more than 20 million shares of Homestore stock, a 19 percent interest then worth upwards of $700 million. Homestore?s stock closed today at 75 cents.
Cendant?s statement also said the company "has no other commitments as it relates to this investment."
Homestore?s own financial statements have been suspended in uncertainty since December 21, when the company announced the audit committee of its board of directors had hired outside auditors and legal counsel to assist with an internal review of certain accounting practices. The company subsequently announced it had overstated its online advertising revenues in the first three quarters of last year by a preliminary estimate of $54-$95 million. No further information about the audit or the restatements has been announced since Jan. 2.
Copyright: Inman News Service