Homestore.com to Cut Jobs

Homestore.com Inc., the Internet’s largest supplier of home-sale listings, announced Thursday that it is slashing as many as 700 jobs, or about 20% of its work force.

The 4-year-old Westlake Village company said its third-quarter results are expected to fall below analysts’ estimates because of a drop in advertising sales. The company’s shares are down 69% for the year.

The job cuts, coupled with a restructuring of the company’s divisions, reflect tough economic realities that many Internet companies have already faced, analysts say, but do not signal a retrenchment in Internet real estate technology, in which Homestore.com has played a major role.

Terrorist attacks on Sept. 11 “were the last [economic] straw,” after a sharp decline in the stock market, said Chairman Stuart Wolff. The attacks’ subsequent closure of airports for several days prevented the sales staff from visiting advertising customers.

“We feel bad about the layoffs, but I think it’s a necessity,” Wolff said. “It’s important that we get [our strategies] straight right now, and come out strong the next couple of quarters.”

The company plans to establish two new operating entities. One will focus on real estate industry customers through Web sites including Realtor.com, Homestore.com and HomeBuilder.com. The other will concentrate on services to merchants and consumers.

Internet real estate experts say Homestore.com had outperformed industry expectations since its inception, growing by about 50% a year, even when the economy began to sour.

The company’s layoffs reflect a general advertising weakness in the Internet industry that have forced it to “reexamine its cost structure for a changed world,” said Lanny Baker, a research analyst with Salomon Smith Barney.

Homestore.com was established more than four years ago and quickly secured more than 95% of the nation’s home listings, about 1.5 million entries. Its strength grew out of its relationship with the National Assn. of Realtors, the industry’s largest trade group.

The company owns a family of Web sites that provide listings for new and existing homes and apartments, as well as remodeling, financial and relocation information.

The Justice Department ended a probe into possible anti-competitive business practices by Homestore.com in July, without taking action.

The agency’s antitrust unit had been investigating the firm’s business strategy, which includes exclusive contracts with many of the country’s largest residential property listing services.

Despite the layoffs, industry experts expect the company to rebound.

Company shares closed at $6.25 on Thursday, down 25 cents, on Nasdaq.