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  • createcurrencythenexit createcurrencythenexit Apr 5, 2006 2:12 PM Flag

    HV businesses in meltdown

    I guess you'd have to do more research than reading charts to know this, but Housevalues core business, selling leads to real estate agents is now losing customers faster than they can add them. Talk about a reversal of fortune. For the first time ever, HV will likely have fewer subscribers this quarter than the previous one.

    Their new product, Homepages.com is DOA. Again, stock chart readers wouldn't know that either.

    What is easy to read and understand is the insider sales. Expecting them to let up anytime soon is futile.

    BTW,there are other reasons for the shares to go lower, such as last quarter's one-time earnings boosts from a tax settlement and a puzzling change to customer amoritization costs from 1.5 to 3 years. Why a company whose customer typically lasts 15 months would change to 3 years is a big red flag.

    As I've suggested in the past, HV businesses are for the most part worthless. So yes the company is worth than the cash, but not much more.

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    • FTE = Full Time Employee (I mention it because at Microsoft there are "blue badge" employees who are full time and "orange badge" employees who are vendors or contractors).

      I haven't invested in this company yet, I'm watching it closely. As you suspect, there could be fundamental flaws with the business model (as it is), however, that doesn't mean that they aren't pursuing an alternate strategy right now. I'm looking for indicators of that change because I fear the industry (Real Estate) might change and if their plan doesn't adapt to those changes it would spell trouble. People on this board tend to see the business model as, as someone else put it, static. With some companies it is, with Housevalues it appears they've built a portal which may not be the best, but it has potential and with some tweaking could do very well. The problem with a stock like this is the speculative nature. People invest in it or short it not because it has good or bad fundamentals, but because of what they think other people will do.

    • I appreciate you sharing your experience at MSN(what's a FTE?).

      Though it's hard at times to discern, there are knowledgable industry professionals who occasionally post would be considered trade knowledge on these boards.

      Good luck with your investment.

    • I worked for MSN as a FTE for five years. Ovbiously you don't know how the review system works or what the overall goal of MSN is. First let me say that until two years ago, the entire division wasn't profitable at all. Performance (not for 'managers', Business Developers would create the working relationship you are discussing) is tied to two things which are drilled into the heads of MSN employees, reach and revenue. "Reach" means both getting new customers and getting those customers to stay on an MSN or MSN related property for as long a time as possible. Revenue is based on clickthrough sales. The development of deals for exclusive portals falls under the former. I'd like to agree to disagree, but you are simply mistaken. If you think MSN Travel uses Expedia because no one else would pay more for the spot, you are horribly confused about how the industry works. As a former MSN entity (even though Microsoft completely sold it off), it has deep ties and Microsoft knows it's a good long term strategy because people can use Passport and are less likely to leave MSN after clicking an ad for travel or even buying tickets (or whatever). Becoming an exclusive portal for MSN is in no way equal to having a banner at the header or footer of their page.

      I have no problem accepting it as fact, so long as you show me evidence and you show me that they are selling a similar product (not just advertising). Obviously a company which sells a $50,000 advertising campaign is not going to be something a fly by night agent who will be out of the industry within a year will use. Apples to apples comparisons only. There would be only one reason you wouldn't be willing to give the names of these companies and that would be that I or someone else could investigate them and find out that it isn't true. Being an insider would only be a problem if you work for both portals, which I seriously doubt.

    • Your view of how MSNBC does business differs greatly from my own experiences with big companies. Managers at MSNBC most likely have bonuses tied to revenue. Let's just agree to disagree on that point.

      As far as the oft stated 'excuse' that HV's customer attrition merely mirrors industry stats, I have a fact you can either accept as true or not. Two leading RE portals, who sell services to RE brokers and agents, have customer retention rates far better than HV's. We're talking monthly attrition of 1%-2% versus the 6%-7% HV has.

      The difference is huge.

    • Here's my question:

      After the last earnings report there was only one inside seller (a venture capitalist which presumably bought the stock at $1-2 a share and very possibly wanted to diversify as most venture capitalists do). Not one person working there sold their shares. As a matter of fact, not one person working there has sold shares since November. Why would these people not sell their shares? Do you think the CEO, for example, who would have had a chance to sell shares or exercise options (probably pre-public, which means they were considerably lower than they are today) didn't do it because he thinks the business model is worthless or their upcoming earning will be bad? I think it's very telling that the entire board of directors could have sold some shares after the earnings report but didn't (and haven't done so for about six months).

      I think it's also telling that this company has partnerships with the biggest online lender in the business (Quicken Loans) and has a co-branding deal with Microsoft on MSNBC. I can't imagine that these companies would partner with a loser company, larger corporations like these two tend to partner with companies they believe will be winners in the long term.

      • 4 Replies to raininginseattle2000
      • Seattle, remember Palm? HV will be a bigger loser than that and that's pretty pathetic.

      • The insider selling isn't a canary in the coal mine, which lots of HV executives selling could suggest. It's a supply and demand kind of dynamic. The largest shareholder of a low float company appears to dumping 75K or so shares onto the market each week, and they are selling into already existing weakness brought on deterioting fundamentals.

        As for MSNBC and Quicken, well, HV is paying MSNBC to be their real estate provider, money talks, and MSNBC isn't a large traffic generator versus the large portals, RE or otherwise. As for Quicken, they are an advertiser on Homepages. Imagine how many press releases we would see if one of the other RE sites trumpeted each ad sale.

        At the end of day, HV has to have products that people want to buy.

        "You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time." -
        -- Abraham Lincoln

      • Raining,

        Are you in the real estate industry? If you were you'd understand what is happening and why. Traditional logic does not play into this stock or this sector.

        You Seattle folks are all in denial. It's a big country and what happens in Seattle doesn't translate into gospel.

        HV is toast. Redfin is warm toast. Zillow is going to be toast. Move.com is going to become a shadow of what it is... sooner or later. Nothing to do with the market.. it's the industry.

        Here is the lesson for the day: value is in the eye of the "paying" beholder... not some suit sitting in an office or an overpaid analyst.

      • I couldn't agree more with you. Furthermore, if the company is crashing as these short sellers are crying, where in the world is the big volume? The volume levels over the last couple of days when the price has dropped aren't anywhere near the volume levels with the big selloff about a month or so ago. This is even more telling if we know that one institutional owner (Blair) is intentionally and systematically paring back its holdings - that cuts the number of other sellers who are allegedly "dumping their shares". And if Google is getting into the same line of business and has the cash to do acquisitions, couldn't that bode well for SOLD. Wouldn't SOLD be a nice target for Google?

    • Since they have 12 month contracts on all their products, they are shielded from a big revenue drop in a single quarter. The bleeding has started in that they can't sign up more subscribers than they are losing. They are also going to have a problem filling lead guarantees to existing HV and JL contracts as the market slows. I think that's why they are so focused on Homepages as that has no lead guarantees.

 
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