Homestore Inc. a company that operates Realtor.com and other real estate search Web sites, announced a net loss of $4.6 million in fourth-quarter 2005, representing in a drop of 3 cents per share.
That compares to net income of $6 million, or 4 cents per share, in fourth-quarter 2004. The fourth-quarter loss reflects expenses of $5.9 million related to an agreement to provide legal costs for a former company officer and a $1.8 million litigation settlement expense.
Total revenue for fourth-quarter 2005, which ended Dec. 31, was $66.6 million, compared to $54.3 million in fourth-quarter 2004. Revenue for the full year 2005 was $252.6 million, compared to $216.9 million for the full year 2004, Homestore officials reported.
Homestore’s stock dropped 17 cents (2.76 percent) Thursday to $5.98 at the close of the market.
Last week, Homestore officials announced a series of company changes, included a re-branding initiative that will change the company name from Homestore to Move Inc. and replace several existing company Web sites with Move.com, a new real estate search site that will feature new-home listings, rental listings and information about real estate-related services.
Move.com will replace Homestore.com, RentNet.com and HomeBuilder.com sites, while Realtor.com will continue to operate at its current Web address.
Homestore also announced a series of enhancements planned to its property-search sites, including improved mapping, community information and opportunities for user-generated online content.
Mike Long, Homestore’s CEO, said the company’s offerings will include both subscription-based and pay-per-lead services to real estate professionals.
The company’s major challenge, he said, is to transition its customers to new products and business models and helping to facilitate the shift toward online advertising.
Lewis R. Belote III, chief financial officer for Homestore, said that a new Web site, HomeInsight.com, will serve as a lead generation source for subscribers to Homestore’s Top Producer sales and marketing software. Consumers who access the site can fill out a form to learn about recent home sales in their area.
Long noted during an earnings announcement Thursday, “The new strategy and products we announced going forward also represent major business changes. While we are very excited about these changes … these new business models are unproven,” he noted.
“Our new name, Move, will better communicate our mission, which is to provide consumers with comprehensive real estate and community information and the decision support tools and professional connections they need before, during and after a move,” Long said in a statement.
Long also said during the earnings call that Homestore officials have addressed most of the “legacy” legal issues related to the company’s past financial problems.
Net income for full-year 2005 was $234,000, compared to a net loss of $7.9 million for the full year of 2004, Homestore reported.
Homestore’s earnings before interest, restructuring charges and certain other non-cash expenses, principally stock-based charges, depreciation, and amortization (EBITDA) for the fourth quarter of 2005 was a loss of $2.8 million, compared to earnings of $2.9 million for the fourth quarter of 2004.
Homestore’s EBITDA for the full year 2005 was $5.4 million, compared to an EBITDA of $2.6 million for full-year 2004. Excluding legal expenses related to reimbursement of defense costs of former officers, which totaled $5.9 million in the fourth quarter and $15.6 million for the full year, EBITDA would have been $3.1 million in the fourth quarter and $21 million for the full year of 2005, Homestore reported.
The company’s real estate services segment includes Realtor.com, Top Producer, HomeBuilder.com and RentNet; and it’s move-related services segment includes Welcome Wagon, Retail Advertising, and Plans and Publications. This segment will also incorporate Moving.com in future quarters, the company announced.
Long said that the housing market appears to be cooling in many markets across the country. “Nationwide, home sales will recede to the levels of a few years ago, which were record-high years at the time,” he said.
At Dec. 31, 2005, Homestore had $152.3 million in cash and short-term investments available to fund operations. The increase of $92.9 million from last quarter includes approximately $94.1 million in net proceeds from the sale of convertible participating preferred stock.
A replay of the company’s quarterly earnings call is available at http://ir.homestore.com, and a telephone replay of the call will be available from 5 p.m. PST (8 p.m. EST) until midnight on March 9 (888) 286-8010.
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