iOwn may have to own up to the fact that it may not be able to follow through with its IPO, filed in December 1999, and delayed by the market dip in April that is still continuing. It may be forced to close its doors if it doesn't slow its burn rate quickly. Showing only $4.6 million in revenue in 1999, and posting a loss from operations of $44.6 million and a total net loss of $45 million, iOwn is running out of cash. As of December 1999, the company had only $27.3 million in cash and cash equivalents, according to a recent report. The IPO market is simply ugly right now. The mortgage site's two competitors who recently went public, E-Loan and Mortgage.com are both trading at a fraction of their opening prices due to market conditions, higher interest rates, expansion costs, and other reasons. iOwn's troubles are significant because the company straddles two industries. With its home search site, Homescout, and its recent announcement that it has added listings from NewHomeNetwork.com, bringing its listings database to over 900,000, the company has been an A-list player in the online homes sector. But popularity doesn't equate with revenues, and IPOs aren't faring that well in the homes arena either. Move.com, Cendant's Internet division, has delayed the IPO on its tracking stock due to turbulent market conditions. This should be a real eye-opener to industry watchers, because this company is no Internet start-up. With the strong track records from several subsidiaries including three of the most important franchise brands - Century21, Coldwell Banker, and ERA, Cendant Mobility, the largest real estate relocation company in the world, and RentNet, a major player in the online apartments sector, Move.com should be a top-three investment choice for those interested in the online homes category. In his coverage of Homestore, analyst Jim Fowler of Thomas Weisel Partners, gave Homestore a Strong Buy rating last month, based in part on Fowler's conclusion that the home product and services industry will be $200 billion. Homestore (at $23.56 a share traded at 10.5 X projected revenues when the report was written) falls below what Fowler calls comparable subscriber-based businesses such as Yahoo! which traded at 56 X revenues, AOL which traded at 15 X earnings, and CNET, trading at 11 times earnings. Comparing Homestore to these giants is flattering, and that Homestore received a strong buy rating is the only good news for the sector, but Homestore.com, considered the gorilla of the homes sector, is still trading less than 80 percent of its all time high, but it is comfortably over its offer price of $19, hovering at about $30. Considering that other subscriber-based businesses in other sectors are valued more favorably, Homestore could possibly now be undervalued by a confused Wall Street. One disturbing line in Fowler's report should be a heads-up for the online homes sector because they are all after the same subscriber base - the online Realtor. The report stated that there are approximately one million real estate agents, and that they are migrating more slowly than other industries to the Internet, with only about 10 percent currently using the Internet to market their services. Homestore stands the most likely chance of selling to this built-in customer base, which doesn't bode well for the other IPO-wannabees that are fighting over the same bone - the Realtor's online marketing dollar. That means for companies such as Homes.com, whose business is selling Web sites and related services, that there must be a great deal of wooing (customer acquisition costs) to entice the Realtor away from the gorilla, not to mention from other innovative competitors such as Homeseekers who is already publicly traded but whose stock is trading at a mere 15% of its all time high. Homeseekers, which according to some analysts is only a few months from profitability, has also seen an anticipated private placement fizzle. The report went on to say that Homestore was aware that its business model was too reliant on subscriptions and has since announced initiatives that appear to go in other directions - a transaction management platform and high-speed Internet access services. But, these are subscription services to be sold to the same subscriber base, so Homestore has not yet addressed the problem of overreliance on a reluctant subscriber base. The entire N.A.R. membership as a potential customer base may be enough to put Homestore back in orbit, how many other IPOs can that same customer base support? Homegain, a seller referral company, raised $53 million in second round financing, but seems to have had mixed luck selling its services to Realtors, as evidenced by increasingly attractive discounts to get agents to subscribe to the service. On Internet discussion groups such as RealTalk and Dealmakers, agents consistently complain that they are not having success with Homegain as a source for leads. Sellers aren't answering bids, they say. Only a very few have reported selling properties because of Homegain referrals. Transaction management is the new buzz word for the online real estate industry. There's just one problem. Who is going to pay for these new services, and how much? The business model supporting these initiatives have not even been announced, but many in the industry assume that they will include some cost to the agent and/or broker. With only one piece of the transaction platform nailed down, Homebid has changed its business model to promote its services as an "offer management platform" marketed to brokers on an office-by-office basis. Although reportedly well-received, can this new model actually generate the levels of growth and revenue necessary to take the company public in today's market? Transaction management solutions provider iProperty.com has just secured an additional $10 Million in funding bringing the company's total capital raised to over $30 Million. iProperty.com will apply the new funds to expand into additional facilities, make acquisitions, and further deploy its ChorusSM transaction management solution, said a company release. How many complete transaction management platforms can the industry support? Is a start-up like iProperty prepared to compete against giants like Homeadvisor and Homestore in this arena? Other players are already diluting the transaction platform business model with free online services to Realtors. One such threat is coming from EZClose, a title services company, which also has dreams of an IPO. How much of a hit can other transaction platform providers hope to have when some services are already free to the subscriber? And what about the e-brokers? ZipRealty, eRealty, eHome, Homebytes and others also dream of going public. But how many brokers are publicly traded? The three largest brands in the nation are under the Cendant umbrella, which is currently trading at a multiple of just two times trailing 12 month sales, despite the fact that Cendant brands account for over 25 percent of listings in the nation, and it has other proven revenue models, not to mention Move.com. As much as these companies dream of cashing out on the IPO pyramid scheme, it is looking unlikely that all or any will be able to do so, at least for the foreseeable future.