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Homestore loss $37.6 million in fourth quarter

March 7, 2003

CEO says company has sufficient capital

Inman News Features

Real estate media and technology supplier Homestore today reported it lost $37.6 million, or $0.32 per share, in the fourth quarter of 2002.

Revenue from continuing operations amounted to $60.8 million, a 25 percent decrease compared with revenue of $81.5 million in the fourth quarter of 2001, and a 5 percent decrease compared with revenue of $63.8 million in the third quarter of 2002. Homestore's gross profit margin remained constant compared with the third quarter at 72 percent.

The net loss for the quarter was $36.6 million, or $0.31 per share, a significantly smaller figure than the net loss of approximately $1.1 billion, or $9.56 per share, reported in the fourth quarter 2001. The fourth quarter 2002 results included an impairment charge of $7.3 million. The company wrote off $925.1 million in the comparable prior-year quarter.

Homestore had $80.5 million in unrestricted cash and equivalents available to fund operations at year end compared with $87.8 million at the end of the third quarter and $52.5 million at year-end 2001.

For the year ended Dec. 31, 2002, Homestore's revenue was $264.6 million, down 13 percent from revenue of $303.8 million for 2001. The loss from continuing operations was $176.1 million, or $1.49 per share, compared with a loss of $1.47 billion, or $13.69 per share, for 2001.

The net loss for 2002 was $163.4 million, or $1.39 per share, compared with a net loss of approximately $1.5 billion, or $13.64 per share, in 2001. The 2002 results included an impairment charge of $7.3 million to reflect the fair market value of certain assets. Results for 2001 reflected an impairment charge of $925.1 million, the company reported.

Homestore CEO Mike Long this afternoon told securities analysts that the company had achieved six milestones in 2002 to improve its business. He said the company strengthened its management team, returned to compliance with securities regulators, strengthened its balance sheet, improved its cost structure by more than $50 million, regained relationships with its customers and industry associations and resolved its dispute with AOL. He characterized resolution of the AOL dispute as "a seminal event" for the company.

The fourth quarter was another "clean-up" quarter in which the company continued to address prior issues that are not normal operating expenses, Long said.

Long said the company has sufficient capital to operate its businesses "for the foreseeable future," although the cash position might shrink to $50 million or less this year due to anticipated capital investments.

"2002 was the year when we created the opportunity for Homestore to have a future," he told the analysts.

Copyright: Inman News Service

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