The housing market may be feeling tenuous these days, but Homestore.com
The move is symbolic, as Homestore hopefully lays to rest the last of its demons. Last week, the company also announced that it would rename itself Move Inc. as a way to expand on the overall housing and rental services market.
During last night's conference call, the company fleshed out its intriguing new strategy. Move will have three different subsidiaries:
- Realtor.com will enhance its home listings by incorporating user-generated content to beef up its community features. The site will also be moving away from its reliance on lead generation -- a move that HouseValues
(NASDAQ:SOLD)seemed to emphasize earlier in the week -- and taking a page from the Google (NASDAQ:GOOG)playbook by offering features listings and pay-per-click text ads.
- Move.com will absorb Homestore.com, Homebuilder.com, and Rent.net. These are the sites dedicated to new home construction and rental listings.
- Welcome Wagon will grow, following the company's $9 million acquisition of Moving.com. Providing new homebuyers with bundled neighborhood ads for related services, Welcome Wagon has been a steady old-school business for the company, and Moving.com will help it establish new relationships with moving trucks, storage providers, and mortgage brokers.
The company expects revenues to rise by more than 15% in 2006. It did not provide bottom-line guidance, but it did indicate that operating profit margins are expected to widen over the course of the year.
The company seems to get it. Starting in mid-2005, it noticed an increase in listings inventory throughout its site. The company recognized this as a sign that the market's upper hand had switched from sellers to buyers. Historically, that has meant that the quality of generated leads deteriorates. The company still plans to use some of its outlets to generate leads -- selling them for between $20 to $35 a lead -- but it's new emphasis will be on the pay-per-click model that has been popularized by Yahoo!
These are interesting times for Homestore and the online real estate companies in general. In a recent article devoted to 10 attractive stocks trading for under $10, I recommended Homestore.com, and HouseValues is a selection in the Motley Fool Hidden Gems newsletter service. Models are being tweaked, and in all of the flux, like the real estate market itself, it may be an attractive buyer's market, too.
Considering a move yourself? Check out our Home Center.
Longtime Fool contributor Rick Munarriz isn't about to "Move" anytime soon. He does not own shares in any of the companies mentioned in this article. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.