Strong Foundation Lets Homestore.com Weather Storm
Like many young Internet companies, Homestore.com has had a white-knuckle trip on the thrill ride of the new economy. After going public last year, its stock zoomed from $20 a share to $138 in January.
Then came the market correction in late March, and the price fell to $36.88. Now folks at the Thousand Oaks-based company have not only picked themselves up, they have also picked up new partners. Lots of them.
After the spring cleaning of the Internet industry, Homestore.com has 1,700 employees, 122,000 paying customers, and a stock price that is gradually and steadily rebounding. It closed Monday at $46.06. The company’s Web site boasts 4 million users each month and has one of the industry’s top times for “stickiness”--how long an Internet user stays at the site.
“Everybody took a big dip,” said Stuart Wolff, Homestore.com’s chairman and chief executive. “Out of 460 public interest companies, there was no differentiation between the good and the bad. So the shakeout has been extremely positive for us.”
Homestore.com is a virtual shopping mall for people interested in anything relating to the home. The Web site, which began four years ago, has about 1 million real estate listings, which are updated daily, as well as information and products on home-related subjects including locating, building, relocating or decorating.
And while many of Homestore.com’s competitors are spitting dust from the first-quarter stock fallout, Wolff and his team are finding not-too-shy allies everywhere.
“There are fluctuations in the stock market all the time,” said Bob Dalaskey, vice president of sales and marketing at Bekins Van Lines. “Those kinds of wild fluctuations occur with many of the dot-com companies.”
Along with Allied, Mayflower, North American and United van lines, Bekins started a joint venture with Homestore.com in September to provide an online source for consumer information and services related to the moving process.
“In their part of the business, they’re market leaders,” Dalaskey said. “They’re a quality company, and we’re glad to be associated with them.”
Homestore.com made about 300 partnerships last year, and since Jan. 1 it has joined with several hundred more companies, ranging from those that provide housing for senior citizens to America Online.
AOL will establish a new home-related channel for its more than 22 million members and provide them with home-related information, tools and services.
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Homestore.com’s own site is a host for the National Assn. of Realtors, National Assn. of Home Builders, and the Remodelers Council. Homestore.com also hosts the National Assn. of the Remodeling Industry and the American Institute of Architects.
“They are doing strategic alliance,” said Jamshid Damooei, an economics professor and business analyst at Cal Lutheran. “They are making sure that they will have a piece of the pie.
“Early last year, there was a kind of euphoria in the stock market, and many public offerings were appreciated, but not because they were the smartest companies on Earth,” said Damooei. “Sooner or later, investors became a lot more rational. So you come to a sense of realism after the company’s initial period in the market, and that is not strange.”
Despite the turbulence, Damooei said, Homestore.com has kept attracting new visitors to its site. That only makes the company more attractive to future partners.
Homestore.com’s success has had somewhat of a downside, as the U.S. Justice Department’s antitrust division has asked the company for information about its activities.
But what has caused problems for software giant Microsoft doesn’t necessarily mean the same thing will happen to Homestore.com.
“Having a probe opened doesn’t mean that you have violated the law in the eyes of the Justice Department,” said Peter Sullivan, an antitrust law specialist at the law firm of Gibson, Dunn and Crutcher in Los Angeles.
Also, Sullivan said, exclusive arrangements, such as those developed by Homestore.com, can have “pro-competitive benefits.”
Wolff would not comment on the specifics of the Justice Department feelers, but said Homestore.com is working hard to set its own course.
“When you’re out front you have to run your race. You have to train hard, work hard and run a smart race,” Wolff said. “Definitely don’t copy; you have to lead, not follow.
“We have $400 million of cash in the bank,” he added. “We’re moving toward profitability, and we’re putting a stake in the ground.”
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Its new partners are willing to stay the course, saying any predictions would be premature.
“At this point anyone who tries to put numbers on the explosive Internet business eats their words,” Bekins’ Dalaskey said. “We’re in it for the long view. We look at it as being beneficial for the consumer and the partner companies involved.”
* STOCK SWAP ACQUISITION
Internet service provider NetZero of Westlake Village purchased online shopping firm RocketCash. B6
