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Technology Stocks : HOMS Homestore.com -- Ignore unavailable to you. Want to Upgrade?

To: jlib who wrote (241)	5/29/2001 5:56:52 PM
From: Kevin Podsiadlik	Read Replies (2) \| Respond to of 505

When Is a Lockup Not a Lockup? By Jay Somaney 5/29/01 2:45 PM ET thestreet.com (subscribers only) When Homestore (HOMS:Nasdaq - news - boards) acquired move.com from Cendant (CD:NYSE - news - boards) early this year, analysts were effusive in their praise for the acquisition. They said this move (no pun intended) would propel Homestore to the next level as the premier Web site for real estate. In exchange, Homestore gave Cendant approximately 21.4 million shares of Homestore stock. In order to placate nervous investors about the potential downdraft if Cendant chose to sell those shares, Homestore's astute management team obtained a two-year lock-in period on those shares owned by Cendant. Both parties walked away happy. Investors jumped into Homestore with unabashed enthusiasm, and analysts cheered. The stock moved from $17 and change to around $35 in several weeks. However, a few months later, some Cendant affiliates are already heading for the exits by registering their shares for sales. How is that possible? Just read on. Last Tuesday, Homestore filed an S-3 registering 2,493,091 shares for sale, of which 2,417,432 were on behalf of entities related to move.com and 75,659 were to former holders of move.com stock. So what happened here? It's called monetizing the value of an investment. Cendant is transferring the 2.417 million shares to Chatham Street Holdings, Liberty Digital and R.R. Donnelly & Sons. These three are investors in move.com and are not subject to the same two-year lock-in restrictions as Cendant. This fact was disclosed in Homestore's proxy filed before the close of the move.com transaction. In addition, DeLise Kiem, director of investor relations of HomeStore.com, said that the three entities were the only outside parties involved in the transaction and the remainder of the stock is locked up for a period of two years after the close of the deal.