Earnings Call Excerpt
Here’s the entire text of the Q&A from Cendant’s (ticker: CD) Q3 2005 conference call. The prepared remarks are here. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.
Q&A
Operator
Q&AOperator
Operator Instruction Our first question comes from Jeffrey Kessler with Lehman Brothers.
Q - Jeffrey Kessler
I have a couple questions, and I'll make them brief. First, with regard to the spin-offs, these spin-offs are of a tax-free structure; there have been some rules in the past limiting the amount or focusing on the amount of time after which something can happen to one of these deals, these structures usually a year. Yesterday on your call you basically said that once these entities were free and clear what they were free to be acquired or whatever on their own. Is there going to be some prohibition of some time difference after the period of time that the spin-offs occurred?
A - Henry Silverman
Jeff, the way the tax rules work is if you spin-off pursuant to a plan, a scheme, a wink or a nod, it's not going to be tax-free. Period, end of story. So we have no plan, scheme, wink or nod. No dialogue, no discussion -- if somebody approached us we would say go away. That said, the day these companies are public the boards of those companies could entertain an unsolicited offer from a potential buyer that had not begun prior to the date of the spin-off. And it wouldn't begin prior to the date of the spin-off because we wouldn't have dialogue with anybody. Because the last thing we need to do is to affect the tax-free nature of the spin. Hopefully that answers your question.
Q - Jeffrey Kessler
Yes, it does. Question two, Orbitz and your GDS business -- I'm sorry Orbitz and your online business overall, how is it tracking in your opinion relative to your competitors domestically and internationally, given that you cited some disappointed because of the shift, the online off-line shift going on with regards to suppliers?
A - Ron Nelson
Think you've got to be careful with percentages, Jeff. Let me deal with the easy one first. Ebookers is not tracking as well as our other international competitors are. And I think it is largely due to some of the problems we've had in conversion and a more difficult integration than we had anticipated. We do think that is interim and we do think that the transition to the Orbitz technology will, once again, ratchet up their bookings growth. Because as you know, the market is growing in the north of 25 to 30%. In Orbitz is where you've got to be careful of the numbers. Our merchant hotel numbers versus 2004 are up pretty substantially in the 35 to 40%. But recall measuring against a year ago Orbitz had just gotten into the merchant hotel business, so it has somewhat of a low base. So on a percentage basis we are probably doing better than our competitors. But I think overall we did fall short of our forecast, and I believe that the amount by which we fell short of our forecast is probably consistent across all the online services. As we've said before, that in periods of strong economic demand the chains domestically can aggregate their own demand, and they allocate less rooms to the online merchants, at least on a merchant basis. And my sense is this is consistent across all the online businesses. So we are down from forecast, but on a percentage basis we are up a lot. I'm sure up a lot more than the other online services.
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