Things just keep getting worse at troubled online real estate play Homestore
Inc., caught up in a scandal over inflated online advertising revenues. Now
the company says it will have to reduce 2000 revenues by $39 million to $45
million.
Homestore also said that the overstated revenues also included income from
categories other than online ad sales. And this morning the company said it
has received notice that Nasdaq has initiated proceedings to delist its stock
for failure to file financial reports on a timely basis. An appeal is
planned.
The company’s stock was set to resume trading today, after being halted by
Nasdaq since Feb. 13. It was trading at 74 cents a share when it was halted.
Homestore also said that online advertising revenue for
the first three quarters of 2001 was overstated by $76 million to $82
million, and that non-advertising revenue for the period was overstated by
$28 million to $31 million.
Homestore said about $7 million to $23 million of the 2001 non-advertising
revenue, mostly from sales of software and services, will be recorded as
deferred revenue at Sept. 30, 2001 and may be recognized as revenue in future
periods. The company determined it had not met all of the conditions required
to recognize this revenue in the first three quarters of 2001.
Previously Homestore had said it might remove as
much as $95 million from its 2001 results. Now it’s up to as much as $113
million.
The company’s internal accounting probe began last December. On Feb. 13
Homestore said it would have to
restate its financial results for all of 2000, as well as the first three
quarters of 2001.
Homestore said it “is firmly committed to completing a thorough inquiry of
these matters and expects to complete the inquiry and file restated financial
statements by mid-March 2002.”
Homestore said earlier that an audit committee investigation of its finances
showed that it had accounted for barter advertising deals as regular ad sales
transactions. A number of people have lost their jobs over the incident, and
the
former CEO was replaced.
The company has said it expects its cash flow from operations to be positive
for the full year 2002. Homestore’s network of Web sites includes the
flagship Realtor.com; HomeBuilder.com; Homestore Apartments & Rentals; and
Homestore.com, a home information resource.