Hertz So Good

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Hertz (NYSE: HTZ) won't let someone else scribble "Wash Me" on its windshield. The auto rental agency is suing Audit Integrity and its CEO for publishing a study that singled out Hertz as one of the 20 large companies supposedly most likely to file for bankruptcy over the next year.

"Not only are the conclusions about our financial health baseless, but questioning the integrity of our financial reporting is indefensible," Hertz CEO Mark Frissora notes in a press release announcing the lawsuit. "We are taking action and responding with the truth because we know that, by not responding, we shouldn't be surprised if the public believes and acts on misinformation and untruths."

The accounting-watching firm turned heads in mid-September with its naughty list. Because the study based its results on accounting and governance risk ratings, Hertz isn't happy with the implications that it had a nearly 4% chance of filing for bankruptcy over the next 12 months.

Rite Aid (NYSE: RAD), Sirius XM Radio (Nasdaq: SIRI), and America Airlines parent AMR (NYSE: AMR) topped the list, but they don't seem to be getting litigious over the study. One has to wonder whether Hertz is hurting itself by drawing attention to the study, even if it's also using this opportunity to sing its own praises.

Rental car companies have been hot this year. Hertz, Avis Budget (NYSE: CAR), and Dollar Thrifty (NYSE: DTG) have all appreciated several times over since bottoming out in March.

The groundswell of optimism appears warranted. Over the past three months alone, analysts have gone from expecting Hertz to earn $0.01 a share this year and $0.11 a share come 2010, to projecting profits of $0.15 a share and $0.42 a share, respectively. Siding with bankruptcy isn't much of a wager during the bottom-line boom that Hertz is experiencing.

However, one has to wonder why Hertz filed the lawsuit in New Jersey nearly two weeks after the Audit Integrity list came out. It was no longer much of a media magnet, and Hertz -- like the other large caps in the list -- appeared ready to let its financial performance be the ultimate rebuttal.

This is still an interesting case with important implications. Hertz just needs to work on its timing.

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Who do you think has a case in this lawsuit? Share your opinion in the comment box below. 

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story. He is also a member of the Motley Fool Rule Breakers analytical team, seeking out the next great growth stock early in its existence. The Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 05, 2009, at 4:25 PM, SIRIDoom wrote:

    SIRI hurting itself by rev-split for NasdaQ compliance. SIRI is off limits.

  • Report this Comment On October 05, 2009, at 4:34 PM, cycle63 wrote:

    I do not believe this will hurt “Hertz”. I am actually glad the company is doing this as there was nothing balanced about this article. If there was, it would have focused more on the 96% instead of the 4. It really looks like this article was nothing more than a piece to get this Audit Integrity group attention at the expense of someone else. I hope they enjoy this part of the attention.

  • Report this Comment On October 05, 2009, at 4:37 PM, cycle63 wrote:

    And Doom, Siri has said nothing about a rev-split. Yes, I know the board approved it, but they have stated it is a last resort. You know as well as everyone else the possibilty of de-listing is almost a year away. SIRI will be over 1$ by that time. The third and fourth quarter results will take care of that.

  • Report this Comment On October 05, 2009, at 4:37 PM, thethirdchimp wrote:

    Dr. Mr. Munarriz,

    Why do you write rehashed, gratuitous garbage? Is it a basic lack of imagination or is the part of your clerk duties at Motley Fool?

  • Report this Comment On October 05, 2009, at 4:38 PM, dedmunds wrote:

    SIRIDoom you made the first comment, you must be so proud of yourself!!! Keep SIRI off limits to yourself so you can be the first to post a BASH about it.

  • Report this Comment On October 05, 2009, at 4:47 PM, Joelshann wrote:

    Article Length (in words) = 347

    Words relative to Sirius = 14

    The day when the iterative moans of Sirius pushers find somewhere else to gripe: Priceless.

  • Report this Comment On October 05, 2009, at 4:51 PM, SIRIDoom wrote:

    ON THE LIGHTER SIDE OF SIRI

    Mel Karmazin was driving down the street in a sweat because he had an important meeting and couldn't find a parking place.

    Looking up to heaven Mel said, “Lord take pity on me. If you find me a parking place I will stop cheating SIRI stock holders and expose Goldman Sachs stock manipulation!”

    Miraculously, a parking place appeared.

    Mel Karmazin looked at up heaven again and said, “Never mind, I found one”.

  • Report this Comment On October 05, 2009, at 4:57 PM, RAF22 wrote:

    Readers should go to Satwaves.com and Seeking Alpha for accurate and unbiased information regarding Sirius XM. The Motley Fool has totally missed the recovery of SIRI and has an agenda of only posting negative and misleading commentary about this company. Any investor who has followed the FOOL's recommendations on all of this has missed a great opportunity - or - even worse - gotten short at lower levels.

  • Report this Comment On October 05, 2009, at 5:00 PM, sweenygao wrote:

    Motley Fool????

    No, Buffoni!!!!!

  • Report this Comment On October 05, 2009, at 5:07 PM, Joelshann wrote:

    RAF22 =

    - member since May 30, 2009

    - no caps rating

    - no posts

    - no recommendations

    - another push for SIRI

    SIRIDoom:

    - member since Nov 11, 2008 (almost a year!!!!)

    - no caps rating

    - no posts

    - no recommendations

    - another slam on SIRI

    It gets easier to cut through the noise when one hears the same skip in the broken record.

  • Report this Comment On October 05, 2009, at 5:09 PM, SIRIDoom wrote:

    cycle63

    SIRI does not need say anything about rev-split. Please see the link here for NasdaQ compliance. As you say, they already have a plan and do not need to respond to the NasdaQ warning letter. They have 180 days from 9/15/09 to trade for 10 consecutive days over the dollar. Because they already have a year old plan, you can not expect the NasdaQ board to provide more time after that 180 days.

    True, the 3q is expected to be good. Will it be good enough to get and hold SIRI 10 days over the buck for compliance? My opinion is no.

    Look farther ahead we see car sales slumping and economy continuing to slide. SIRI 4q is in trouble as are many other stocks. IMHO.

    Mel Karmacrook should use the good news of the 3q to decrease the stigma run down of the rev-split. Very possible the split will happen soon. SIRI is off limits...

    http://www.nasdaq.com/services/DelDefOpenReport.pdf

  • Report this Comment On October 05, 2009, at 5:11 PM, sweenygao wrote:

    Motley Fool = Solo chiacchiera e distintivo!

  • Report this Comment On October 05, 2009, at 5:20 PM, SIRIDoom wrote:

    Joelshann

    Think of it as ying and yang. If you have paid advertisers constantly selling bios on a stock. You need someone looking out for the little people.

    SIRI is my baby project. I use it. I know about it. I trade it. I tell what I know especially if I think people are going to lose on it.

    No I have never shorted SIRI. I learned to ONLY day trade SIRI. I am sitting out until the rev-split is over.

  • Report this Comment On October 05, 2009, at 5:25 PM, SIRIDoom wrote:

    Seeking Alpha is a bios site full of pro SIRI. You will NOT find anything but propiganda at Seeking Alpha. They Censor all SIRI negative comments.

    Get your real information here at the FOOL. They ROCK!!!!

  • Report this Comment On October 05, 2009, at 5:38 PM, sweenygao wrote:

    Motley Fool = GS Leccaculo!

  • Report this Comment On October 05, 2009, at 6:42 PM, dedmunds wrote:

    Readers should go to Satwaves.com and Seeking Alpha for accurate and unbiased information regarding Sirius XM. The only site for true information on SIRI.

  • Report this Comment On October 05, 2009, at 6:47 PM, yahoomania wrote:

    Are you FREAKING KIDDING ME RICK????????? How many FREAKING times are you going to bring up the results of that ridiculous BK survey???? You're a disgrace to news media.

  • Report this Comment On October 05, 2009, at 7:03 PM, Fredlee009 wrote:

    Please stop addressing Siri-Dumb like hes a real person. He will not be blathering about the R/S for the next 5 years. Meanwhile the stock will be well over $4 by then, and Siri-Dumb will still be talking about the R/S. Of course, I wont really know about it, but I might check back in from time to time to laugh at him, and anyone who would listen to a copy and paste basher. Silly world. And as for MF, come on. Just go out of business already please, so i dont have to come here anymore and defend against your BS articles about Sirius. I have better things to do.

    How long can you be wrong about a company?

  • Report this Comment On October 05, 2009, at 7:03 PM, Fredlee009 wrote:

    I mean he will be blathering, sorry about that....

  • Report this Comment On October 05, 2009, at 7:46 PM, mlrinc10 wrote:

    First of all, SIRIDoom has been around much longer than you all know. He is just like a basher named AllBloom on the now defunct aol Sirius msg board (for at least nine yrs). His only concern is his agenda, paid or not, and fortunately intelligence and persistence among the Siri longs has always paid off.

    He can 360 on a dime and has NOTHING else better to do. That being said, he is intelligent and may just be enjoying the devil's advocate role or just have a slightly dominant sociopath gene. One thing for sure, his only goal in life is to disrupt this stock. He has already admitted to day-trading, what more do you need to know. His main modus operandi is to beat a dead horse subject into the ground until he is 210% wrong. He is best interpreted as amusement, except for that REALLY STUPID parking the car joke.

  • Report this Comment On October 05, 2009, at 7:53 PM, larslong wrote:

    yahoomania - lmao.

    I think Rick will use this article 3 more times before the q3 report and then 2 times per quarter going foward. BTW did you see the article about SIRI going bankrupt in a hertz article? If not maybe I can send you a link (now if i could only find one here somewhere)...

  • Report this Comment On October 05, 2009, at 8:10 PM, Fredlee009 wrote:

    I would be anything Motely Fool goes BK before SiriusXM.

  • Report this Comment On October 05, 2009, at 8:20 PM, EgisCoder wrote:

    You guys are taking advice from someone in a failed 90s dance music group!! LOL. Too funny.

    http://www.youtube.com/watch?v=Wu5D1AaEoB8

    Maybe Lenny Dykstra can help you plan your retirement portfolio. LOL. Too funny.

  • Report this Comment On October 05, 2009, at 8:41 PM, unionbuster wrote:

    whatever siridoom is saying, siri is not headed for a split

  • Report this Comment On October 06, 2009, at 12:40 AM, SIRIDoom wrote:

    Geesh the noise

    The Seeking Alpha and SIRI paid advertisers have arrived. Disruption, this is what they do. If it is bad for SIRI than discredit the comment and bash the writer. I came here to get away from this noise.

    OK, well let me say it like this, SIRI is junk stock with a bad CEO joined at the hip with Goldman Sach manipulation. SIRI is about to go into a rev-split that has been planned for over a year. Trade at your own risk.

  • Report this Comment On October 06, 2009, at 10:39 AM, barbapapa wrote:

    What's your point, Mr Munarriz?

    Are you bullish or bearish on the stock? Not clear.

    I don't think the economy is doing as well as some experts would like us to think. Rising unemployment does not bode well for car rental companies such as Hertz.

    With the amount of debt they're carrying, I don't see how Htz can avoid bankruptcy in the near or medium-term future.

  • Report this Comment On October 06, 2009, at 10:43 AM, dedmunds wrote:

    Readers should go to Satwaves.com and Seeking Alpha for accurate and unbiased information regarding Sirius XM. The only site for true information on SIRI.

  • Report this Comment On October 06, 2009, at 1:06 PM, Zippy6 wrote:

    I like the parking joke.

  • Report this Comment On October 06, 2009, at 4:14 PM, rhamp wrote:

    Siri-doom,

    What is the point rolling out the same BS everytime there is an article. We all know you lost money, tough crap, now move on. And if you are day trading the stock and made money off it, good for you, now move on. Everyone knows they approved a reverse split, we voted on it. And everyone knew the delisting letter was coming eventually the day they lifted the ban on delisting.

    You are not giving anyone any information that they do not already have. Look, you got in way to early and you lost money, I am sorry for you but do I really need to read you cry about it in every comment section? Grow up, if you were as smart as you pretend to be you would have already moved on to picking winners.

    I am sure you are a good guy who just did not know what he was doing and lost some money. It happens to certain people from time to time. Get over it.

  • Report this Comment On October 06, 2009, at 4:16 PM, rhamp wrote:

    PS I assume you heard that stupid joke somewhere and was very excited to use it here. It did not work.

  • Report this Comment On October 06, 2009, at 4:51 PM, damasa42000 wrote:

    Has anyone thought about when ATT and the iphone's contract runs out? This will open the iPhone up to be used as a docking station and may attract a few more subscribers. It may not have a major effect, however, a potential effect none the less.

  • Report this Comment On October 06, 2009, at 8:28 PM, Stockingitup wrote:

    SIRIUS SHOULD SUE MOTLEY FOOL

  • Report this Comment On October 06, 2009, at 11:05 PM, SIRIDoom wrote:

    The following has been censored deleted off Seeking Alpha because they are bios and only want good news. AVOID SEEKING ALPHA CENSORSHIP!

    ALERT - Mel and the board announced intention to sell all shares upon vesting. This is NOT a good sign. Could be setting the time table for the rev-split. The rev-split is on the way.

    -------------

    Sirius XM Executives Intend to Sell Shares

    The Wall Street Journal

    Granted millions of company shares in May, five top executives at Sirius XM Radio Inc. disclosed their intention to sell them all upon vesting. So far, they have sold seven million shares for nearly $3.2 million.

    The last time an insider at the company made a purchase larger than a few hundred dollars was in August 2008, when Sirius XM Chief Executive Mel Karmazin bought two million shares shortly after the merger of Sirius Satellite Radio Inc. and XM Satellite Radio ...

    http://online.wsj.com/article/SB125487968715969811.html?ru=y...

  • Report this Comment On October 07, 2009, at 2:16 AM, SIRIDoom wrote:

    Executives selling shares is very bad news that should not be censored. I have reposted the information on SA and will continue to do so all Wed.

    People should always check "The Fool" articals for the best avalible information and opinions.

  • Report this Comment On October 07, 2009, at 9:38 AM, Fool wrote:

    All I can say, is are you Sirius??? It appears that Hertz is the best place to rent a car because of price, vehicles and service. I would guess that Hertz will be the last one standing after the consolidation of their industry. It seems that Hertz has more of offer than anyone else. I will continue to rent from Hertz as I have never had a problem with them and this BK is BS.

  • Report this Comment On October 07, 2009, at 5:09 PM, plange01 wrote:

    hertz the near bankrupt hedge fund controlled car rental company.this company was bought by cerberus stripped of its assets had it staff reduced to nothing then add a few billion in debt and dump the whole stinking mess on the public with a ipo!this one is a first class loser ...

  • Report this Comment On October 08, 2009, at 5:02 PM, plange01 wrote:

    hertz the hedge fund controlled one time largest car rental company is now moving closer to declaring bankruptcy as its massive debt and declining rentals continue to eat up any profits...

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