What an article - one guy says HOMS is a monopoly another felcher comes on and says HOMS faces formidable competition. The time to buy is gone (rehash of Jim Morrisson).
Homestore.com, Trade Group Unveil Justice Probe
By Sue Zeidler
LOS ANGELES (Reuters) - Homestore.com Inc. (NasdaqNM:HOMS - news), the largest Internet home and real estate company, and the National Association of Realtors (NAR) have been asked by the U.S. Justice Department's antitrust division to provide information for a probe into practices in the online real estate sector, the company and the trade group said on Tuesday.
``We are conducting an investigation into potentially anti-competitive conduct involving the online realty listings industry,'' said Jennifer Rose, a spokeswoman for the Justice Department, said. She would not elaborate.
``We don't see anything that we've done that would create any sort of antitrust issues,'' John Giesecke, chief financial officer of Thousand Oaks, Calif.-based Homestore.com, told Reuters in an interview.
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Industry sources, however, said Homestore.com had been targeted due to concerns that it had offered special compensation to multiple listing services (MLS), or companies that compile real estate property information, to list their data exclusively on its site.
``They have 85 percent to 90 percent of the aggregate MLS listings. The issue was that they offered warrants in the company for exclusivity,'' said one executive at a competing real estate listing venture, requesting anonymity.
Giesecke would not disclose how many exclusive relationships the company had with multiple listing services, but said it had entered into exclusive deals on a national level and compensated its partners with company stock.
``When we entered into these relationships we felt the larger portion should be compensation in the form of stock. This way our partners could share in the success of our company and we could conserve cash,'' he said.
The National Association of Realtors, a trade group representing 750,000 real estate professionals, which also has a minority stake in Homestore.com, said the Justice Department requested information on Realtor.com, a site operated by Homestore.com.
``We are entirely confident that no laws have been violated in the operation of Realtor.com. Of course, we will cooperate completely with the Justice Department and we anticipate that it will reach the same conclusion,'' Dennis Cronk, president of the trade group, said in a statement.
Realtor.com is the largest site of real estate listings, representing 98 percent of properties for sale in the United States, an NAR spokesman said.
The government has not alleged any violation of law, Homestore said, adding it believes it has complied with all laws and regulations. Homestore said it intends to cooperate with the Justice Department's request.
Homestore.com stock closed off 2 1/4 at 19 1/2 on Nasdaq.
As the largest home and real estate network on the Internet, Homestore.com offers users information on buying homes, finding a broker, renting and moving. It derives revenues through subscription services, advertising and e-commerce.
``There certainly isn't any law against being No. 1 and no law against doing anything better than anyone,'' Giesecke said.
``For us to run into trouble like Microsoft has, you'd have to prove we have a monopoly and that's pretty hard to prove with all these companies in the space,'' he said.
``You'd also have to prove that we used a monopoly to harm consumers and it's (our service) very much a value-add to the consumers,'' he said.
Giesecke also said he was comfortable with forecasts for the company to hit $140 million in revenues this year, up from $73 million in 1999.
But Giesecke said that while Homestore.com leads the sector, it faces formidable competition from companies like Cendant Corp.(NYSE:CD - news), Microsoft Corp. (NasdaqNM:MSFT - news), Yahoo Inc. (NasdaqNM:YHOO - news) and newspapers, which are providing similar online services.
Homestore.com on Monday announced it had attracted over 3 million users during March, a record monthly audience and twice as large as its closest competitor.
The Homestore.com family of Web sites also ranked first in total site usage, as visitors spent nearly 84 million minutes on its network in March, four times greater than its nearest competitor.
Another industry source said the alignment between the company and the association also raised eyebrows.
``They're an obvious target, because they're partly owned by the association of realtors,'' said an executive of another real estate company.
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