Interactive Corp. and Move Inc., two competitors that both have a significant presence in real estate on the Web, were the top performers on Wall Street in November among the 10 real estate brokerage, mortgage and technology stocks that comprise the Inman Index. Shares of Move Inc. were up from $4.84 to $5.55, a gain of 14.7 percent, while shares of Interactive advanced from $32 to $36.49, a gain of 14 percent.
Earnings expectations appeared to be a positive factor for both companies.
Move, formerly known as Homestore, reported net income of $1.3 million, or 1 cent per share, for the third quarter of 2006 compared with $1.9 million, or 1 cent per share, for the prior-year third quarter. Revenue was $75.5 million in the recent period, a 14 percent increase compared with $66.3 million for the comparable prior-year quarter, according to a company statement.
Move CFO Lew Belote, during a conference call with analysts, said revenue was expected to decline in the fourth quarter compared with the third quarter of 2006, but could surpass fourth-quarter-2005 revenue by more than 10 percent. He also suggested Move might achieve 20 percent year-over-year revenue growth in 2008.
TCS Capital/Eric Semler increased its ownership of Move from 11 million shares to 13.4 million shares, or 8.8 percent of the company’s stock, according to an SEC filing reported by StreetInsider.com.
Shares of Interactive Corp. hit a new 52-week high Nov. 1, after the company announced net income of $75 million, or 24 cents per share, for the third quarter of 2006 compared with $68 million, or 20 cents per share, for the prior-year quarter. Revenue increased 11 percent to $1.6 billion in the recent third quarter from $1.4 billion in the prior-year third quarter.
Standard & Poor’s announced that Interactive Corp. would replace Lucent Technologies in the Standard & Poor’s 500 index after stock-market trading closed Nov. 30, the date on which Lucent was to be acquired by Alcatel.
In the negative column, shares of ZipRealty dropped from $8.38 to $7.71 in November, a one-month loss of 8 percent.
Earnings expectations were also an issue as Zip reported a 78 percent plunge in net income to $622,000, or 3 cents per share, for the third quarter of 2006 from $2.8 million, or 14 cents per share, for the third quarter of 2005. Net revenue dropped 7.3 percent to $26.2 million in the recent quarter from $28.2 million in prior-year quarter. Management anticipated a net loss of 13 cents to 18 cents per share for the 2006 fourth quarter, a result that would create a net loss for the year as well, according to a company statement.
Mortgage finance companies Fannie Mae and Freddie Mac were also in the negative column in November. Fannie Mae shares fell from $59.26 to $57.07, a loss of 3.7 percent, while Freddie Mac shares dropped from $68.90 to $67.17, a loss of 2.5 percent.
News reports suggested the two secondary mortgage market companies might benefit from the new Democrat power-hold in Congress.
A U.S. News and World Report story said the Democrats’ “ascendance might take some heat off the quasi-public entities.”
A MarketWatch story said Democrats “are generally seen as more sympathetic to the government-sponsored companies,” and “the election results may reduce the chances of Congress passing legislation that would tighten certain rules on both companies.” However, the story also said Rep. Barney Frank, D-Mass., who is expected to chair the House Financial Services Committee, intends to revive legislation that would create a new regulator for the two companies.
Fannie Mae, which has yet to file its 2004 and 2005 financial statements with the Securities Exchange Commission, said it will spend more than $1 billion to fix its accounting problems and prepare the financial statements and reports. The company also will pay former CEO Franklin Raines $2.6 million as part of a settlement of a dispute over his compensation. Raines took early retirement after the accounting problems surfaced more than two years ago.
Freddie Mac, meanwhile, has made only “slow and inconsistent progress” in fixing its accounting problems, according to a Bloomberg News story about an Office of Federal Housing Enterprise Oversight report.
Stock picker Jim Cramer touted Fannie Mae on a televised investment program and said the company’s share price would top $70, according to Web site reports. An analyst at Credit Suisse maintained a “neutral” rating on Fannie Mae with a target price of $55 per share.
In other mortgage stock-related news:
- An analyst at Punk Ziegel & Co. kept a “market perform” rating on WaMu and increased the target price to $47 per share, according to NewRatings.com. Employee layoffs continued at the banking company.
- Countrywide has introduced auto insurance with substantial discounts for current customers in five states and plans to add 25 more states by year-end 2007, according to a company statement.
- IndyMac reported third-quarter-2006 net income of $86.2 million, or $1.19 per share, compared with third-quarter-2005 net income of $77.5 million, or $1.16 per share. Revenue was $345 million in the recent quarter. Analysts at JMP Securities maintained a “market outperform” rating on the company with a target price raised to $56 per share.
The hypothetical Inman Index gained 1.2 percent in November, an identical performance to that of the Dow Jones Industrials, but a laggard behind the Standard & Poor’s 500 and NASDAQ Composite indices, which gained 1.7 percent and 2.5 percent, respectively.
Next month: The Inman Index 2006 year-end report.
Marcie Geffner is a real estate reporter in Los Angeles.
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