WESTLAKE VILLAGE, Calif. (Inman News Features) - In a move that may or may not be related to class-action suit by its shareholders, Westlake Village, Calif.-based Homestore.com announced yesterday it overstated its online advertising revenues in the first three quarters of last year by $54-$95 million. Today?s preliminary estimate is the first indication of the magnitude of the company?s previously reported expectation of restating its financial results. The audit committee of Homestore?s board of directors reportedly is examining a large but unspecified number of transactions in 2000 and 2001 and expects to complete its review by the end of the current quarter.
The restatement involves advertising revenues that should have been accounted for as barter transactions because they were tied to the company?s purchases of goods and services from one or more unidentified advertisers.
Homestore will revise its financial statements and Form 10-Q reports to the Securities and Exchange Commission for the quarters ended March 31, June 30 and Sept. 30, 2001, and may restate its financial statements and Form 10-K report to the SEC for the year ended Dec. 31, 2000.
The company warned investors not to rely on its previously filed Form 10-Q reports or financial statements for those periods.
Homestore.com announced the inquiry into certain of its accounting practices on Dec. 24. Trading of the company?s stock on Nasdaq has been suspended since shortly after that announcement.
Homestore.com operates the National Association of Realtors official homes-for-sale Web site Realtor.com, the National Association of Home Builders official new homes Web site HomeBuilder.com and an apartments and rentals Web site in addition to Homestore.com.
Separately, NAR today issued a statement from 2002 President Martin Edwards Jr. on the audit of Homestore.com?s accounting practices.
"(Homestore.com?s) audit committee with the assistance of independent legal counsel and independent accountants is conducting a thorough inquiry into the company's accounting practices. We at NAR have full confidence in the audit committee and the ultimate resolution of Homestore's accounting issues," Edwards said.
"NAR senior staff and association volunteers have been working closely with Realtor.com management to ensure full Realtor support of their efforts to keep Realtor.com on track and focused on current and future needs of Realtors and of the home-buying and home-selling public. Working together, NAR will spare no efforts to ensure Realtor.com's continued success," he said.
Chicago-headquartered NAR represents approximately 800,000 residential and commercial Realtors.