Homes.com announced Wednesday that it is laying off approximately 150 employees in a bid to preserve cash and move toward positive cash flow from operations.
The layoffs, which represent approximately 40 percent of the company’s employees, will be made in sales, product development and administrative staff.
According to the company, the cuts are “due to disappointing operating results in January and February combined with the very difficult environment for raising capital.”
“With the markets being what they are, we found it necessary to reduce our operating expenses in order to continue as a viable business,” Homes.com president Tom Orsi said.
Orsi added that the cuts will have no impact on the company’s ability to provide service to the more than 150,000 agents and brokers who use Homes.com’s services.
The company also indicated that it will continue with the development of new services and features to add to its existing product line, which already includes personalized Web sites for agents and brokers.
Although Orsi expressed confidence in the company’s business model, Homes.com faces formidable competition from Homestore.com (Nasdaq: HOMS), which holds the lion’s share of the online real estate market.
Just last month, the U.S. Department of Justice (DOJ) signed off on Homestore.com’s planned purchase of Move.com, setting the stage for the Internet’s largest real estate firm to become even more dominant.
Homestore operates sites such as Realtor.com, HomeFair.com and HomeBuilder.com. The site also has a long-standing partnership with the National Association of Realtors, a relationship that has drawn criticism from independent realtors.
In addition, Homestore.com has a marketing deal with America Online, which the site says is a source of much of its traffic. The site reportedly receives 5 million unique visitors a month and is seeing marked increases.
The online real estate sector also has a new business-to-business (B2B) player in the form of three major U.S. corporations, which teamed late last year with an online realty service to form a B2B corporate real estate e-marketplace.
Bank of America (NYSE: BAC), IBM (NYSE: IBM) and Prudential Insurance, which together account for some US$3 billion in real-estate transactions each year, took ownership stakes in netStruxr.com, a Web-based portal aimed at matching corporate real estate buyers, owners and service providers.
For its part, Homes.com joins a parade of dot-coms and even tech giants in cutting jobs in a slowing economy.
In addition to recent layoffs at high-tech firms Intel, Cisco, Nortel, Dell, 3Com and Motorola, workers have been given pink slips at Buy.com and Egghead.com, as well as the now-closed eToys, in recent weeks.