Homestore revenues down in third quarter

Homestore Inc., a real estate media and technology supplier, reported third quarter revenue from continuing operations of $63.8 million, down 3 percent from revenue of $65.9 million for the second quarter of 2002, the company announced Nov. 13.

The decline in revenue of $2.1 million from the second quarter is a result of a change in the company's sales and fulfillment strategy of virtual tour products and a decline in online advertising revenue from nonrecurring contracts.

Even with the $2.1 million decline in revenue, the gross profit margin improved to 72 percent in the third quarter compared to 68 percent in the second quarter.

The loss from continuing operations was $40.4 million, or 34 cents per share, compared to a loss from continuing operations of $62.4 million, or 53 cents per share in the second quarter of 2002. The net loss for the quarter was $39.8 million, or 34 cents per share, compared to $52.3 million or 44 cents per share for the second quarter of 2002.

In the third quarter, the company recorded a restructuring charge of $10.7 million. In the second quarter, the company had a $10.2 million gain from the sale of ConsumerInfo.com and a $23 million litigation settlement charge. Excluding these nonrecurring items, the net loss in the third quarter was $29 million compared to $39.4 million in the second quarter of 2002.

Noncash expenses included in operating results, consisting of stock-based charges, depreciation and amortization, were $29.6 million in the third quarter compared to $28.5 million in the second quarter of 2002.

Excluding these noncash expenses and the nonrecurring charges outlined above, the company's income from operations was $700,000 in the third quarter of 2002 compared to a loss from operations of $8.4 million in the second quarter of 2002.

"We set out at the beginning of the year to strengthen our balance sheet, stabilize our revenues and get our expense structure in line with those revenues by the end of the year. We have accomplished these goals a full quarter earlier than our previous expectations," said Mike Long, Homestore's CEO.

"We are now in a position to focus on and execute a growth strategy for Homestore. We have adequate resources and intend to make strategic investments in products and services that will enhance the productivity and profitability of our customers."

Compared to the year ago results, Homestore's revenue declined 21 percent from revenue of $80.8 million for the third quarter of 2001.