Yes, in the past few years, there was a need for lots of housecleaning. There's no doubt current management has done a wonderful job with the restructuring.
But the sins of the past keep revisiting the company. Yesterday, Homestore's stock plunged 14.7% on the release of its quarterly report. In fact, the company was not alone, as other Net stocks got whacked, such as IAC/InterActiveCorp
As for Homestore, the company was able to grow revenues 5% to $56.8 million in the second quarter, although that was below the consensus estimate of $58 million. The company sustained a loss of $0.03 a share, which was worse than the expected $0.01 loss.
On the conference call, management indicated several reasons for the miss. There is the outstanding shareholder litigation, as well as the significant costs of Sarbanes-Oxley. In fact, the costs of regulatory compliance are becoming a major problem for many small caps, as Bill Mann points out in Your Ownership Is Revoked.
While other restructurings -- such as Tyco's
Fool contributor Tom Taulli is the author of The EDGAR Online Guide to Decoding Financial Statements . He does not own shares in any of the stocks mentioned.
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