To help revive the real estate sector, the Obama government approved the extension of an $8,000 tax credit for first-time home buyers until April 30, 2010. The credit, earlier scheduled to lapse in November of this year, is now available till the end of 2010 in a phased out fashion. The goverment is also controlling mortgage rates by pumping in funds. The Federal Reserve added $1.25 trillion into mortgage-backed securities to try to lower mortgage rates and loosen credit via a program scheduled to end by March next year. Recently, the National Association of Realtors recorded monthly resales growth in October of 10.1% to a seasonally adjusted annual rate of 6.1 million, thus registering the biggest monthly increase in a decade. Home prices are also lower, and median sales prices are 7% lower over the year and 25% below the peak. But, despite lower prices and additional incentives, overall house sales are nearly 16% below their peak sale levels in 2005. Online realtors, ZipRealty and Move are thus finding recovery a very slow process.
ZipRealty’s (ZIPR), Q3 revenues of $35.4 million grew 13% over the year driven by 31% growth in closed transactions. Their margins improved with the quarter’s earnings at $0.01 per share, compared with a loss of $0.03 per share a year ago.
The company’s web site improvements are giving them good results. With 96% consumer satisfaction on the sites, ZIP was able to drive more transactions. During the quarter, they closed $1.54 billion worth of transactions compared with $1.36 billion worth of transactions closed a year ago. But, the average net transaction revenue per close fell 13.8% to $5,284 in the quarter. At the end of the quarter, they had employed 3,205 ZipAgents compared with the 2,814 employed a year ago.
The company proejcts revenues for the full year to grow in the upper-single to low double digits over 2008 levels. The full-year GAAP net loss is expected to be narrower than the 2008 net loss of $14.7 million.
The stock is trading at $4.11 with a market capitalization of $84 million. It had reached a 52-week high of $4.35 late last quarter.
Move’s (MOVE) Q3 revenues of $52.9 million were marginally below the Street’s expected $53.3 million and significantly lower than the previous year’s revenues of $61.2 million. Loss of $0.01 per share was also shy of the gains of $0.01 expected by the market.
In the recent quarter, Move has been busy with management changes. The company hired Steve Berkowitz as CEO and added several new executive management leaders for technology and product operations. Move continued to integrate its sales functions across all product lines and launched new services for its customers.
Recently, the company announced a joint venture with Builders Digital Experience that will help new home builders reach buyers with innovative online marketing solutions. The service is expected to enable “increased investment in product portfolio expansion while providing builders with greater value and affordability.” Through this partnership, Builders Digital Experience will operate the Move.com New Homes Channel and NewHomeSource.com, and deliver the largest online collection of new home listings. It will also provide a one-stop-shop in the form of a comprehensive portfolio of marketing and media services needed by home builders to market homes to buyers.
Despite these initiatives, the company’s outlook was disappointing. For Q4, it projects revenues of $47 million-$48 million, far below the Street’s estimated $54.6 million. For the coming year, Move projects revenues of $184 million-$192 million, which is also well below the Street’s expected revenues of $230 million.
The stock is trading at $1.64 with a market capitalization of $255 million. Like Zip, Move too reached a 52-week high of $3.18 late last quarter. I maintain my stand that NewsCorp or IAC should look at acquiring Move.
It is not just the real estate which is at the beginning of a slow comeback. Global recruitment is also slowly recovering. The $7 billion worth global online and offline recruitment market gets $2.4 billion turnover from the online market. The online market has already registered a drop of 40% over the year while offline recruitment market declined 45% over the year. During the period, the online recruiter, Monster has seen its share grow from 28% of the online market to 30.8%. Monster now controls 10.6% of the overall recruitment market compared with 10% a year ago.
Hiring is picking up globally, with most countries reporting bottoming out of recession. The U.S. employment index survey conducted by Monster for October reveals improvement of merely a point over the previous month, suggesting the bottoming out of the market. However, the index is still 20% lower than the previous year. Health care and public administration were the two verticals to display big growth in October, while the retail and hospitality industries retracted. The European indices are also seeing marginal improvement with hiring activity picking up in health care, education, and the public sector. The greatest traction is in the Chinese and Korean markets, where demand is expected to grow much faster.
Yet, Monster’s Q3 performance was below expectations. Revenues of $215 million fell 35% over the previous year’s $332 million. EPS continued its decline and fell from $0.40 earned a year ago to $0.01 in the latest quarter. The market was looking for revenues of $217 million with a break-even earnings quarter.
Forty-two percent of revenues were generated outside the United States and were negatively impacted by $7.4 million from unfavorable foreign exchange rates. By segment, careers revenues fell 39% to $180 million with North America generating $95 million compared with $155 million earned a year ago. Careers International revenues of $85 million registered a 40% decline over the year. Internet Advertising & Fees revenues were relatively flat at $35 million for the quarter.
Monster is continuing to develop new products to attract both job seekers and employers. For job seekers, they launched career management resources such as Career Mapping, Career Benchmarking tools earlier this year. They have also redesigned their Web pages and applications to give a more user-friendly experience while ensuring that the new pages are more streamlined and consistent across their global sites. For employers, they launched an e-commerce platform earlier this month. The Web 2.0 platform features facilities such as easier workflows, a resource center and a targeted content offering. Monster is rightly investing in these innovations to make sure that once the market picks up, their growing market share will help them take a bigger lead over their peers.
With their tie up in Australia with NWS, they launched the new Monster CareerOne site and have overtaken the number two player in the market, MyCareer. They are also beginning to provide competition to SEEK in that market. Recently, they also announced another tie up with the San Diego Tribune which will allow the newspaper’s readers access to Monster’s tools and resources. Monster now has more 400 daily and weekly newspapers and over 100 television outlets as part of its media alliance strategy.
The stock is currently trading at $15.11 with a market capitalization of $1.9 billion. It had reached a 52-week high of $19.28 in September this year.
Shutterfly Inc, (SFLY.O) the online photo sharing company, again managed to beat the quarter’s estimates. Q3 revenues of $40.5 million were significantly better than the Street’s expected $36.0 million. They suffered a loss of $0.25 a share, which was also better than the expected loss of $0.30 a share. This was the company’s 35th consecutive quarter of year on year revenue growth.
During the quarter, they had 982,000 transaction customers who generated over 1.7 million orders with an average order value of $23.03. They recorded 7% growth in customers over the year, 3% increase in orders and a 6% growth in average order value.
In terms of product mix, revenues from prints and personalized products and services totaled 39% and 58% respectively and commercial print revenues contributed 3% share to the quarter.
To add to the personal publishing platform solution, they recently launched the Simple Path Photo Book creation process which reduces the time, effort and price of creating a “coffee table quality Photo Book.” The Simple Path algorithm helps to organize photos in a photo book and lets users create a photo book in one click. To further personalize their books, users are allowed access to several style templates and editing tools. These photo books can also be shared via Shutterfly’s share site and social networking and blogging sites such as Face book, My Space, and WordPress.
Within cards too, the company made significant enhancements. Sutterfly refreshed its collection of cards by adding more than 800 new holiday designs, improved the ability to include images, graphics, and text in multiple layouts inside the cards, and extended their direct mail service by mailing customers’ cards directly from their manufacturing facility. Shutterfly also added new features such as attribute-based filtering to help customers find the right card type and style, cross-selling functionality to showcase related products such as thank-you cards and gift tags, and partnered with five charitable organizations to create holiday cards that let customers and their donors supporting these charitable causes.
Shutterfly is also expanding its shared sitesand recently launched sports share sites which provide features such as permitting teams to gather, share pictures and videos, coordinate the logistics such as the team roster, and even plan out snacks, plays of the game, and maps to the event. To increase awareness of this sports share sites, the company partnered with leading national and regional youth soccer, football, and cheerleading organizations and already have more than 15,000 sport sites created during the quarter.
During the quarter, they acquired Tiny Pictures, a venture-backed San Francisco start-up which developed photo and video applications for mobile and social platforms. Shutterfly will use Tiny Pictures’ capabilities to work on new iPhone applications aimed at engaging and adding customers in unique ways.
Shutterfly is helping professional photographers as well and recently announced the addition of Digital Download to its Pro Gallery service, which permits professional photographers to sell high resolution copies of their images to customers directly from their Pro Gallery accounts.
The company expects revenues of $102.6 million-$112.6 million with EPS of $0.68-$0.78 compared with the Street’s expected revenues of $110.6 million and EPS of $0.70.
The stock is trading at $14.73 with market capitalization of $378 million. It reached a 52-year high of $18.13 in September of this year.