Addendum to previous message...see story below, also from Realtor Magazine.
My personal thought: Now that HOMS has bought move.com from Cendant and Cendant has agreed to things that will benefit not only the bottom line of HOMS in the future, but presumably three major Cendant brands, do you really think HOMS is going BK any time soon?
Maybe.....but I don't see that in the cards, as I said before. (Unless, of course, Cendant decides to stop caring about its brands and cuts them loose.)
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The following article was published on 05/01/2001
LETTERS
Homestore.com
NAR President Responds to Fire on move.com Acquisition
Let it never be said that NAR members shy away from controversy. In late February, Homestore, based in Westlake Village, Calif., completed its acquisition of move.com from Cendant Corp. As part of the deal, Cendant gained equity ownership in Homestore. The announcement started a flurry of letters to NAR from members concerned about how the deal would impact realtor.com's neutrality as a nationwide listing site for REALTORS®. A subsidiary of Homestore operates realtor.com--and Cendant, based in Parsippany, N.J., operates three of the largest brands in real estate: Century 21, Coldwell Banker, and ERA. NAR President Richard A. Mendenhall drafted the following response to members' letters:
Thanks to those of you who wrote to express your concern. Like you, I believe that the interests of NAR members must always come first in all NAR dealings with Homestore. I want to ensure that all members have accurate information and not some of the misleading information that has been spread by e-mail over the past month. There are 10 important points I'd like to make:
1. Great care was taken in structuring Homestore's acquisition of move.com to assure that no preference would be given to the Cendant real estate brands. For example, neither Cendant nor any of its brands will receive any special pricing on products or services that isn't available to other Homestore customers. Nor will Cendant have early access to technology. Rumors that Cendant has received free Web pages are untrue.
2. In the purchase, Cendant received 19 percent equity in Homestore, not 26 percent as some had reported.
3. Cendant received one seat on the Homestore board, but Cendant is required to vote its Homestore shares on all corporate matters in proportion to the voting decisions of all other shareholders, thereby effectively neutralizing its presence as a shareholder.
4. Although Cendant is entitled to one seat on the Homestore board, that director will not be able to control any corporate action taken by Homestore and, like all other directors, owes fiduciary duties to Homestore.
5. Cendant doesn't have any position on the board of RealSelect, the subsidiary that actually operates and controls all the real estate-related activities of Homestore, including realtor.com. On the other hand, NAR has two seats on the RealSelect board and substantial controls over the operation of that corporation.
6. Homestore did not acquire Cendant. It acquired only move.com, the Web site owned by Cendant. At the time, move.com was one of the major sites that consumers used to view real estate listings. Now those consumers will be directed to realtor.com, and that increases consumer views for all REALTORS® . Remember, too, that Cendant's brands--Century 21, Coldwell Banker, and ERA--include many members of NAR. We are pleased that those members are part of realtor.com.
7. Another concern was the possibility that a competitor would acquire move.com, which could have put realtor.com at a disadvantage. Since the acquisition, traffic at realtor.com has increased by more than 1.6 million unique visits per month.
8. Cendant has committed to spend real money, not stock, for professional products for its 190,000 licensees, thereby strengthening the revenue streams of RealSelect.
9. Cendant has also agreed to provide exposure for realtor.com in its advertising. That's good for all REALTORS® , not just Cendant affiliates.
10. NAR's brand is not Homestore.com. The realtor.com brand (and URL) is solely owned by NAR, and we'll never sell any part of that to anyone.
Having said all that, I want to be explicitly clear that NAR will continue to monitor Homestore's actions to be sure it's acting in the best interest of our members.
Last, I don't own, nor have I ever owned, stock in Homestore. I don't represent Homestore. I represent you and fully intend to represent you and all members and association executives of NAR.
[signed]
Richard A. Mendenhall, CCIM, CIPS, CRB, 2001 president, NATIONAL ASSOCIATION OF REALTORS® |
