homestore.com
Everyone has been faced with finding a place to live and the questions associated with
renting
or buying a home. House hunters may wonder: What type of neighborhood do I want to
live
in? How do I find a realtor? Where can I find listings of the available units in the area?
How
much can I afford to pay? What lender should I use? Where do I go for help?
Homestore.com (HOMS $30-7/8) provides the answers to these questions. The site
offers
voluminous listings through its network--Realtor.com for existing homes,
HomeBuilder.com for
new homes, SpringStreet.com for rentals and CommercialSource.com for commercial
listings--along with engaging content that speaks to myriad real estate-related needs and
interests. If you get inspired by author Judith Krantz's favorite fabrics or need a primer
on
plumbing or a hassle-free strategy for moving your pet, it's all there, presented via a
warm,
consumer-friendly interface with links to purchase the supplies you might need for your
next
foray into decorating or home repair.
We believe the key to Homestore.com's breadth is its relationships with the National
Association of Realtors, the National Association of HomeBuilders and the Multiple
Listing
Service, which enable it to present itself as a one-stop shop for listings. Fees for hosting
those listings on its own Web real estate make up the majority of Homestore's revenue,
which
amounted to $38.6 million in the most recent quarter, up 37% sequentially. But
advertisers
like Chase Manhattan (CMB $74) and GMAC Mortgage have been contributing
substantially,
and Robertson Stephens Sr. Internet Analyst Michael Graham expects ad sales to make
up
an increasing proportion of the whole.
In our opinion, Homestore has been adept at making alliances, and this month it unveiled
one
of its most important, with America Online (AOL $56-3/4). The two companies have
embarked
on an ambitious plan to create a real estate channel on AOL's network, which we
believe
would give Homestore's visibility a big boost. The first results could be up and running
this
summer.
"Homestore addresses huge markets, the largest purchasing cycle in a consumer's life,"
says Graham. "We believe this is one of the businesses that really make sense to bring
online."
Investment Risks: Among the risks are that the Internet is an increasingly competitive
environment in which to conduct business; the real estate market is seasonal and
cyclical;
the company's NAR and NAHB relationships involve a number of risks and
uncertainties. The
company is dependent on NAR, which licenses Homestore.com the REALTOR
trademark. In
addition, the company relies on MLSs, home builders, and property owners for listings to
add
to its database. The company must continue to add content, products and services to its
offerings to retain its customer base. Homestore.com depends on AOL to sell some of
its
advertising and depends on its portal partners for traffic.
Go to homestore.com
Robertson Stephens maintains a market in the shares of Homestore.com and has been a
managing or comanaging underwriter for or has privately placed securities of
HomeStore.com
within the past three years.
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