Homestore.com (Nasdaq: HOMS), the No. 1 online real-estate company, said Thursday it will cut as many as 700 jobs, or about 20 percent of its workforce, as it trims costs and reorganizes its operations.
The Westlake Village, California-based e-business, which works with the National Association of Realtors to provide home listings and other real-estate services over the Internet, said it will take a charge to fourth-quarter results to cover the job cuts. Homestore said it will provide more details on the plan when it reports third-quarter results on November 1st.
Chairman and chief executive officer Stuart Wolff called the job cuts”necessary to ensure the continued strength of the valuable franchise thatwe’ve established over the past five years.”
The reorganization involves the creation of two main operating units, aswell as a third to handle advertising and business development.
The real estate services group will handle the company’s Realtor.com,HomeBuilder.com and Homestore.com Web sites, as well as its otherreal-estate interests. There will also be a retail and consumer servicesdivision that will focus on localized merchants and service providers as well asconsumer direct services, including the iPlace, Welcome Wagon and Local Online businesses.
The third division, corporate development, will handle mergers andacquisitions, business development, corporate partnerships and advertisingsales.
Though Homestore’s network of Web sites rank among the most popular Internetdestinations — Realtor.com set a record for traffic last month — thecompany has had a hard time making money. Earlier this month, Homestorewarned that the September 11th terrorist attacks and the widespread slump inthe advertising markets would hold results back for the third quarter endedSeptember 30th.
The company predicts revenue of US$114 million to $118 million and a loss before nonrecurring items of one to six cents per share. “The attacks compounded an already deteriorating advertising market and caused a loss of business due to the cancellation of sales visits to professional customers,” Homestore said.
Homestore shares closed Thursday at $6.25, down 25 cents. The shares aredown from a 52-week high of $43, as the company suffers from a weak onlineadvertising market and a drop in home sales.
Reports this week showed big drops in sales of both new and previously ownedhomes in September, as the terrorist attacks brought activity to a nearhalt.
Another online realtor, Homeseekers.com (OTC: HMSK), earlierthis month announced a big quarterly loss. That company, which has beendelisted by Nasdaq, is in the midst of a reorganization that officials sayis likely to take a lot of work.