Homestore Moves Closer to Profitability
Homestore Inc., struggling to complete a turnaround that began more than two years ago, said Wednesday that it greatly narrowed its third-quarter loss as revenue rose nearly 9%.
The online real estate company lost $4.6 million, or 3 cents a share, compared with a loss of $30.6 million, or 26 cents, a year earlier.
Revenue rose to $56.1 million in the period ended Sept. 30 from $51.6 million in 2003.
Homestore operates the official Multiple Listing Service of the National Assn. of Realtors and generates revenue through Realtors’ advertising. It also runs HomeBuilder.com, a website listing new homes for sale, and RentNet, an online apartment listing service.
Analysts polled by Thomson First Call were expecting the company to break even in the quarter on sales of $57.7 million.
“There is more work to be done,” said Mark Mahaney, an analyst with American Technology Research. “Parts are doing fine. But it’s been a very long turnaround, and there’s still not a light at the end of the tunnel.”
As in previous quarters, legal issues stemming from a 2001 accounting scandal continue to be a drag on profitability at the Westlake Village company.
The latest results included a $7.2-million charge related to a court ruling last week in which Homestore was ordered to pay the legal expenses of a former company officer. The company is considering an appeal.
The results included a separate $1.4-million settlement expense that resulted from an agreement with the Labor Department to pay overtime- related back wages to 435 employees, and a $2.1-million gain from a real estate sale.
Excluding those gains and charges, Homestore would have earned about $1.9 million, or about a penny a share.
“Our turnaround efforts continue to be partially masked by a variety of one-time and nonrecurring items that do not impact the underlying earnings power of our assets,” Chief Executive Mike Long told investors.
He noted that the latest quarter was the third consecutive period of year-over-year revenue growth but that “we still have an enormous amount of work to do.”
Homestore has yet to post a full-year profit, but Long expressed optimism earlier this year that 2004 might be different. The company did not provide a fourth-quarter outlook.
In the coming year, Homestore plans to invest as much as $25 million in its RentNet and HomeBuilder.com businesses as well as its Welcome Wagon print advertising unit, Long said.
Homestore released earnings after the market closed. Its stock rose 23 cents, or 9.7%, to $2.60 on Nasdaq.
