Homestore trims fat

October 2, 2002

Company will take million-dollar restructuring charge in third quarter

Inman News Features

Homestore closed its third quarter yesterday by handing out final paychecks to an undisclosed number of employees in its outside sales force. The staff reduction, which will trigger a restructuring charge in the just-completed quarter, was part of the company's effort to revamp its sales and account management operations.

The Westlake Village, Calif.-based company that operates for the National Association of Realtors and sells Web sites and other technology products to real estate salespeople has been on a mission to reduce its per-sale selling costs by bringing sales functions from the field into the corporate offices.

Homestore spokesperson Delise Keim said the restructuring has involved some layoffs, some job reassignments and some hiring this year. She said the company cut back the ranks of outside salespeople, who were responsible for both on-site sales calls and account management functions, and switched to a new structure that retains a small outside sales force and adds in-house account managers to perform outbound telesales and account support functions.

"We've increased the 'touch points' to the customers by doing more inside calling, so there will be more frequent contact," Keim said.

A number of department managers were affected by the restructuring, but no changes have been implemented among the top executives other than the previously announced departure of President Steve Ozonian, who has accepted a position with RE/MAX International.

Keim said the net effect of the restructuring is a lower head count, but she would not disclose how many people have been laid off in total, how many were cut back from the outside sales force in particular or how many people now are employed in the sales and support departments.

"We had a goal to reduce the number of total employees across the company, and we have continued along the path of that goal. There are less people here than there were three months ago. It wasn't a sweep across the company. It was department by department and it was based on what (functions) we wanted to enhance," she said.

Other sources told Inman News a substantial proportion of the outside salespeople, who once numbered approximately 170 employees, received pink slips yesterday.

The restructuring is in line with CEO Mike Long's stated goal of bringing the company to positive cash flow by year-end. He said in August that cash flow from operations was improving, but the cost per dollar of revenue generated was still too high. Keim today said the company is on track to achieve that goal. But Long has not made any forward-looking comments about the company's financial results or outlook for turning a profit.

The restructuring will result in a significant charge against earnings in the third quarter that ended yesterday, according to Keim. She said the dollar amount "could very well be millions," taking into consideration the total number of people laid off during the quarter, employee contract termination fees and other related costs.

"I don't think it's tens of millions, but I think the word 'million' will be there," she said.

Copyright: Inman News Service

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