Say what you will about online realtor Homestore Inc., the company took its lumps in the past year, but unlike many dot-coms, Homestore is still out there fighting.
Once a high roller with a price-per-share of around $120, Homestore's stock toppled to 14 cents last fall amid bad press over a Securities and Exchange Commission (SEC) investigation that culminated in four former execs pleading guilty to corporate fraud and a class action lawsuit by the California State Teachers' Retirement System (CalSTRS).
By late summer 2003, Homestore, which manages Realtor.com and homebuilder.com, traded at around $2.65 a share--and the company's new management was crossing its fingers that the worst was over.
On the plus side, Homestore settled with CalSTRS for $63.6 million in stock and cash and also settled its ongoing dispute with Cendant Corp., which stemmed from Homestore overstating its 2000 revenue. Another major plus is that in the fall of 2002 the SEC indicated it would not prosecute the company based on the cooperative stance Homestore took with federal investigators.
As Homestore waded through its maze of lawsuits, the company was also focused on growing the business. In the last 12 months, Homestore has inked exclusive listing deals with AOL, MSN, Yahoo, Earthlink, and United Online.
"We now reach 99.7 percent of all home shoppers online," boasts Allan P. Merrill, Homestore's executive vice president of corporate development.
"I'm watching what they do, but I'd like to see some revenue growth over a couple of quarters before I get too excited," says analyst Shawn Milne of SoundView Technology Group, who adds that as the real estate market softens, Homestore's value proposition will improve.
Learn more about markets featured in this article: Los Angeles, CA.
