Homestore To Cut 700 Jobs, Restructure

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 that we've established over the past five years."

Rearranging Functions

The reorganization involves the creation of two main operating units, as well 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 other real-estate interests. There will also be a retail and consumer services division that will focus on localized merchants and service providers as well as consumer direct services, including the iPlace, Welcome Wagon and Local Online businesses.

The third division, corporate development, will handle mergers and acquisitions, business development, corporate partnerships and advertising sales.

Hard Times

Though Homestore's network of Web sites rank among the most popular Internet destinations -- Realtor.com set a record for traffic last month -- the company has had a hard time making money. Earlier this month, Homestore warned that the September 11th terrorist attacks and the widespread slump in the advertising markets would hold results back for the third quarter ended September 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.

Taking Stock

Homestore shares closed Thursday at $6.25, down 25 cents. The shares are down from a 52-week high of $43, as the company suffers from a weak online advertising market and a drop in home sales.

Reports this week showed big drops in sales of both new and previously owned homes in September, as the terrorist attacks brought activity to a near halt.

Another online realtor, Homeseekers.com (OTC: HMSK), earlier this month announced a big quarterly loss. That company, which has been delisted by Nasdaq, is in the midst of a reorganization that officials say is likely to take a lot of work.