Recovering Internet real estate operation Homestore managed to cut its
second-quarter loss despite reduced revenues as it continues to restructure
following an accounting scandal over the recording of ad revenues.
The Westlake Village, Calif.-based company , whose stock
is below $1 a share, said revenues were down 15 percent year-over-year at
$65.9 million for the second quarter.
The loss was $52.3 million or 44 cents per share, compared to a loss of
$120.9 million in the same period in 2001.
The online real estate play racked up
staggering losses after overstating ad revenue for 2000 and for three
quarters in 2001 and has been rebuilding and restructuring ever since.
Homestore said its second quarter results reflect a $23 million charge to its
operating results for the settlement of a lawsuit filed by Memberworks over
Homestore’s purchase of ConsumerInfo’s former parent company, iPlace Inc.
The results for the second quarter also include a gain from discontinued
operations of $10.2 million from the sale of the company’s ConsumerInfo
division, which was sold to U.K.-based business software company Experian on
April 2.
A federal judge ruled in
March that the sale could go through.
Homestore bought ConsumerInfo.com from iPlace in August 2001. However, court
action came from Stamford, Conn.-based membership services company
MemberWorks which had been the majority owner of iPlace.
MemberWorks said that a substantial portion of the purchase price from
Homestore was paid in the form of Homestore common stock, valued in the
merger agreement at approximately $22 per share, or a total of $36 million.
However, the stock declined to about $2 after the scandal broke.
As part of the settlement agreement, Homestore will receive $35 million in
cash from sale proceeds and Memberworks and certain other former iPlace
shareholders will receive $23 million as settlement of claims. A judge had
ordered that $58 million of the $130 million in proceeds from the sale of
ConsumerInfo.com should be placed in a trust.
As for Homestore’s future results, CEO Mike Long said the company expects to
achieve operating positive cash flow by December, but he would not be more
specific on guidance.
Homestore’s network of Web sites includes the flagship Realtor.com;
HomeBuilder.com; Homestore Apartments & Rentals; and Homestore.com, a home
information resource. Other Homestore advertising divisions are Homestore
Plans & Publications and Welcome Wagon.
