ONLY LOST A BILLION->Homestore posts Q4 loss, warns on legal costs
By Andrea Orr and Ben Berkowitz
PALO ALTO, Calif., April 3 (Reuters) - Online real estate services company Homestore.com Inc <HOMSE.O> Wednesday reported a fourth quarter net loss of more than $1 billion, as it reduced reported revenues for the prior three quarters and warned that it may incur heavy legal costs as a result of extensive accounting errors over the past two years.
The latest numbers should close the book on a months-long process of removing false revenue from old income statements, but not on the lawsuits related to its accounting errors.
In a separate filing Homestore made on Wednesday with the Securities and Exchange Commission, the company said it continued to face a number of challenges, including 23 lawsuits filed against it, and possible additional asset sales.
For the fourth quarter ended Dec. 31, Westlake Village, California-based Homestore reported a net loss of $1.1 billion, or $9.51 per share, compared with a loss in the year-ago quarter of $53.6 million, or 65 cents per share.
The results included charges of $960 million for acquisitions, restructuring and certain assets. Excluding the charges, the company said it lost $146.6 million, or $1.26 per share.
Homestore, whose Web site features information related to buying or renting a home, decorating and moving, said quarterly revenues grew to $79.8 million from $52.6 million the year before.
CLOSES ASSET SALE
The company, which last month restated its year 2000 results to correct for improperly booked revenues, on Wednesday said 2001 results had also been significantly overstated.
Homestore reduced revenue for the first nine months of 2001 to $227.9 million from $350.9 million, and increased its net loss for the period to $359 million from $245.8 million.
As with the accounting errors for 2000, most of the overstatement in 2001 came from barter deals in which Homestore swapped advertising space on its site in exchange for ads on another site.
Barter deals were once a common practice among Internet companies, but often were recorded in a misleading way on income statements.
Homestore said it had about $52.2 million in unrestricted cash at the end of last year, and expects it had about $28 million as of March 31.
Homestore also announced the sale of its consumer credit division, ConsumerInfo.com, for $130 million, which is expected to result in net proceeds of $115 million. Some $58 million of that amount is set aside as a potential claim by a company that had sold assets to Homestore in exchange for a stock payment at a time when the stock price was inflated.
Homestore shares, which rose 5 cents on Wednesday to close at $2.30, are down from a 52-week high of $37.16.
A company spokeswoman declined to comment Wednesday on Homestore's future plans or possible sales of additional assets.
But in its SEC filing, Homestore warned, "it is possible that we may be required to pay substantial damages or settlement costs in connection with the litigation, which could have a material adverse effect on our financial condition."
The company said it could also be subject to substantial penalties or sanctions as a result of its past accounting errors.
19:07 04-03-02 |
