Homestore executives clean house
Under pressure for overstating its revenue by as much as $95 million last year, the online real estate company announces a new management team.
Co-founder Stuart Wolff stepped down as chairman and chief executive. The new CEO, W. Michael Long, had been the CEO of Healtheon and then chairman of online WebMD after the two companies merged. He brings with him other WebMD alumni: Jack Dennison, who will be Homestore's new chief operating officer, and Lew Belote, who will be the new chief financial officer.
Homestore's new chairman is Joe Hanauer, a longtime member of the company's board of directors.
Also Monday, Homestore representatives announced that the company is providing additional information on its ongoing internal inquiry to the Nasdaq national market and that it has placed three of its finance and business development employees on administrative leave as a result of the investigation. Nasdaq suspended trading in Homestore shares Dec. 21, after the company announced that it would restate its earnings after conducting an inquiry into its accounting practices.
Homestore representatives did not immediately return calls seeking comment.
Homestore shares resumed trading Monday after the announcements. The company's stock closed down $1.14, or nearly 32 percent, to $2.46. As recently as July, the company's stock was trading at more than $30 per share.
Last month, Homestore CFO Joseph Shew resigned, citing personal reasons. The resignation came weeks after the company announced that its third-quarter revenue was far lower than originally expected, with online advertising sales dropping 44 percent from the second quarter. With revenue falling, Homestore announced in late October that it was laying off 700 employees, or 20 percent of its staff, in a reorganization.
Last week, the company admitted that it had overstated its revenue by between $54 million and $95 million during the first nine months of last year. The overstatement was a result of counting as revenue a number of barter transactions where the company traded advertising space for goods and services from other companies.
The Westlake Village, Calif.-based company said last week that it is continuing its investigation and is looking at transactions made in 2000. On Monday, Homestore warned that the investigation could result in further restatements of its revenue that could include "periods before 2001."
The admissions are only the latest problems for Homestore. Previously considered one of the few dot-com successes, the company has been dragged through the dirt in recent months.
Dennison previously served as executive vice president and general counsel of Healtheon and WebMD. Belote was senior vice president of finance at Healtheon and WebMD.