Cendant considers spin-offs from Web commerce division

Summary:Beleaguered Cendant Corp. is considering spinning off its NetMarket Web commerce division, along with other "interactive" assets.

Beleaguered Cendant Corp. is considering spinning off its NetMarket Web commerce division, along with other "interactive" assets.

Up to 40 percent of these assets, which include such online brands as NetGrocer, AutoVantage and Books.com, would be offered to the public if a decision is made to go ahead, the company says. The online units operate like a price club. Members pay an entry fee and are then offered deeply discounted goods.

A Source at Cendant (NYSE:CD) says the units boast about 700,000 members, and that most of those online members signed up as a result of Cendant's two-year, $50 million deal with America Online.

The AOL deal calls for co-branded commerce stores. An existing service called Shopper's Advantage on AOL is being rebranded as AOL's NetMarket.

A NetMarket spokesperson, Chris Jones, acknowledged that the company is exploring a plan for a public offering, although he cautioned that Cendant has "not yet hired any bankers."

IPO is possible
Cendant has been much in the news in recent weeks, the most recent headline concerning the July 28 resignation of Chairman Walter Forbes, who stepped down in the wake of a massive financial scandal.

CUC International, of which Forbes was chairman, had merged with a company called HFS Inc. to form Cendant. CUC International has been accused of booking up to half a billion dollars in fake revenue and pretax income, and other financial irregularities.

Cendant was forced to restate income figures as a result, and the stock has plunged from a 52-week high of more than $40 to its current trough between $17 and $18.

Cendant's Internet offerings now are displayed on the Web in a somewhat confusing manner. For example, if a user goes to the NetMarket home page, which offers a wide variety of goods for sale, and clicks "books," a generic-looking commerce page appears, and it is not clear that the company even operates Books.com.

NetMarket offers such a variety of goods and services that it resembles the discredited online mall concept once championed by MCI and IBM.

But Cendant owns some powerful Web brands that could do very well in the public markets, given the steep rise of commerce brands including Amazon.com.

Claims 73 million members
Internationally, Cendant claims some 73 million memberships to its various clubs, including Travelers Advantage, Shoppers Advantage and AutoVantage. Cendant spokesman Scott Shapiro says that on the Web, AutoVantage is a "close second" in revenue to Auto-By-Tel in the category of online auto merchants, stores that link to existing dealers.

Cendant also owns several other computer-related assets, including software and game maker Sierra On-Line; the World Opponent Network, which offers free online games; Network Blizzard Entertainment, which makes entertainment software; and Knowledge Adventure Inc., maker of educational software.

Topics: Amazon, IBM, Start-Ups

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