Homestore announced that losses were narrowed, and the improved results were due to cost-cutting, but they were also due to a rise in revenues in their media services division including advertising sales through Realtor.com. What do Homestore CEO Mike Long, Executive VP Corporate Development Group Allan Merrill, and the rest of the company do for their next trick?

The net loss for the fourth quarter was reported at $(12.1) million, or $(0.10) per share, compared to a net loss of $(30.6) million, or $(0.26) per share, for the third quarter of 2003. Excluding restructuring, impairment and certain other non-cash expenses, principally stock-based charges, depreciation, and amortization, says the company, Homestore's loss from operations was $(770,000) in the fourth quarter, compared to a loss of $(4.8) million in the third quarter of 2003.

The company's cut operating expenses, but it also had to pay out $10 million related to a class-action settlement. According to the release, cash reserves were at $35.5 million as of December 31, 2003. Total revenues for the fourth quarter was $54.9 million, compared to $55.1 million in the third quarter of 2003, with the gross margin improved to 74 percent from 72 percent in the previous quarter.

Although revenues were slightly down for the fourth quarter due to dragging performance in the print segment, the hero of Homestore's revenues is media services, advertising-related services which includes retail advertising, Realtor.com, Rentnet and Homebuilder.com. Software and print are in other segments, which Long says the company will start to concentrate on now that concentration on Realtor.com and other Realtor-related services have been retooled. For example, Top Producer - real estate-specific productivity software is moving from desktop to an ASP - application service provider online.

"I think we achieved our goals to communicate steady progress," says Long. "It is still early. We have retooled all our products in Realtor.com, and we will do the same in our other areas. We have completed transformation of Top Producer to an ASP solution, and Welcome Wagon is not operating at a loss anymore. In 2004, he says, the focus will be on bringing other products and services in media services up to snuff.

Said a cheerful Merrill, "What I was struck by is this is the first earnings announcement where we have talked about our business and not a bunch of other stuff. There is some real good news, and we are in a nice position to talk about products and services."

Says Long, "We offered up the belief that the company will experience revenue growth and achieve GAAP profitability in 2004, and that we have executed on our business plan and we still have more work to do. Instead of talking about the past, we can focus on the future."

Some wonder if Long's job is nearing an end. He bristles at the notion that he was brought in to Homestore as a turnaround guy.

"That doesn't match up with history," points out Long. "I was with one company for 19 years and I didn't want to sell but they offered a price to the board which they accepted, or I'd still be there. Then there was Web MD, which was a five-year commitment. I'm a long-term guy. I like real estate. I think it is interesting, and intellectually challenging. I like the people. I'm not inclined to throw that hard-earned knowledge away and there is plenty more to learn. I guess what I'm saying is I don't plan to go anywhere. I'm not a turnaround guy. I'm here for the long term."

The software business was up in the fourth quarter, but the media business has been up three quarters in a row, and that was before Realtor.com president Allan Dalton began touring the country in his "List More, Save More," roadshow designed to attract more Realtors to use the Internet to advertise their listings robustly with multiple photos and other enhancements.

"What happened is that we aren't wealthy,so we had to pick investment priorities," explains Long. "We decided to work on the Realtors' business first, and that has consumed our investment dollars. The Realtor business had the best quarter. I think 2004 in the Realtor category is something we feel good about. What we have to do now is we have to invest in our non- Realtor businesses to get them on par with our Realtor businesses. And we have to follow through."

So what does this mean to Realtors?

"It means we're going to be around," says Long. "The whole dialog is changing out there. The dialog was once all about the past, now it is about the future. People want to know 'Can you deliver me products and services that make me more money?' It's different. The realtors on the street are trying to make a living, and I'm all for it."

Homestore's media services achieved improved profitability, says Homestore, with operating margins increasing from 6.6 percent in the third quarter to 15 percent in the fourth.

"We believe these trends are early indicators of the market acceptance of our products and services, better reflecting the value we deliver to our customers," says Long.

Published: March 15, 2004

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.