Editor’s note: This story has been corrected to note that Move posted a $15.5 million net loss in 2010. The $20.9 million figure originally reported was the net loss applicable to common stockholders, which takes into account preferred stock dividends and related accretion.
Realtor.com operator Move Inc. said it will ask shareholders to approve a one-for-four reverse stock split and will streamline its capital structure by buying back $70 million in convertible preferred stock held by private equity firm Elevation Partners, which has an investment team that includes rock group U2’s lead singer Bono and a former Apple executive.
The measures — along with a two-year, $25 million stock repurchase program — were announced Thursday as Move reported net income of $409,000 for the fourth quarter and a $15.5 million loss for the year.
Fourth-quarter revenue was down 1.5 percent from a year ago, to $48.9 million, while revenue for the year overall fell 6.8 percent from 2009, to $197.5 million.
Move said it expects revenue for the first quarter of 2011 to be about the same as the last, but that revenue will grow to $200 million to $205 million for the year.
Move CEO Steve Berkowitz said that while there are still "serious market headwinds" in housing, Move will build on its new Realtor.com operating agreement with the National Association of Realtors — which paved the way for its acquisition of Listhub and advertising alliance with AOL — to fuel growth.
"One of the key elements of our updated agreement with the (association) was we are now allowed to syndicate listings in conjunction with the content owner," Berkowitz said in a conference call with investors.
"This was the driving force behind our acquisition of ListHub, and allowed us to add AOL as an important distribution partner in January. The philosophy here is simple: If consumers can find the information they want, their experience is better."
Berkowitz said Move has become the leader in real estate mobile applications, with more than 3 million downloads. The company’s new Android app is gaining 30,000 new users a week, he said, and in January, 600,000 users of all the company’s mobile apps viewed 75 million pages.
Move continues to sign up multiple listing services as users of its "Find" search tool, with 13 multiple listing services representing more than 100,000 members now on board, he said. As part of the deal, those MLSs provide Move with historical listings data, including recently sold listings.
Move said its agreement with Elevation Partners to repurchase most of the preferred stock held by the private equity firm, together with the reverse stock split and repurchase program, will help the company manage dilution that may occur from stock option exercises, or offset the dilution that would result if the preferred stock is converted into common shares.
The maneuvers also reduce Move’s carrying costs and better align it with its peers, the company said.
Elevation Partners invested $100 million in Move in November 2005 — back when the company was still known as Homestore.
In its last annual report to investors, Move said Elevation Partners’ stake in the company — which consisted of 100,000 shares of convertible preferred stock — was convertible into common stock at a conversion price of $4.20 per share.
Move said that if Elevation Partners converted all of its preferred shares into common stock, they would represent about 15 percent of the company’s outstanding common stock — diluting the value of existing shares of common stock.
By "redeeming," or buying back, 70,000 preferred shares held by Elevation Partners, Move prevents those shares from being converted into common stock. Elevation Partners still holds preferred stock valued at $50 million, Move said.
Under the terms of its Nov. 6, 2005, stock purchase agreement, Move wasn’t allowed to redeem any of Elevation Partners’ preferred shares for five years, but was required to redeem any shares not converted into common stock on the seventh anniversary of the deal.
Move will also ask shareholders attending the company’s annual meeting in June to approve a one-for-four reverse stock split, in which every four shares of Move common stock will be converted into one share.
That move should provide a boost of the same magnitude to the share price of Move’s common stock — which closed up more than 6 percent Thursday, at $2.56.
Under the terms of the 2005 stock purchase agreement, Move was granted the right to convert Elevation Partners’ preferred stock into common stock if the average closing price per share of the common stock during any 30 consecutive trading days is at least $7.77.
In another move often employed by companies to shore up the share price of their stock, Move said its board of directors had authorized a two-year, $25 million stock repurchase program.
Move said it is not obligated to repurchase any shares under the program, and it may be limited or terminated at any time without notice.
The last time Move announced a stock repurchase program — a one-year, $50 million plan approved by the board of directors in September 2007 — it was allowed to expire after the company purchased 4.16 million shares for $10 million.
