Citing the continued slowdown and uncertainty in the nation’s housing markets, ZipRealty today said it plans to eliminate jobs and take other cost-cutting measures, and lowered its earnings guidance for 2007.
Some real estate markets have been hit hard this year by slowing sales and tightened lending standards, which have squeezed the pool of buyers and softened demand. The National Association of Realtors this week said it expects home sales to fall 10.8 percent and prices to fall 1.3 percent this year.
ZipRealty’s management expects it can lower the company’s current operating expense structure by about $4 million annually, the company said in a statement.
“The majority of these reductions come from the elimination of positions in the corporate headquarters and the field offices, and the remainder is expected to come from improvements in operating efficiencies,” the company said.
The real estate company did not specify how many jobs would be affected.
As a result of cutting staff, the Emeryville, Calif.-based company said it expects to incur one-time employee termination costs of less than $250,000 in the fourth quarter.
ZipRealty also lowered its 2007 earnings guidance today to a range of $97.5 million to $102.5 million from previous guidance of $105 million to $110 million.
The brokerage company said that the staff reduction and cost-cutting measures will not affect its previously announced plans to expand into new markets by year-end.
ZipRealty is publicly traded on the NASDAQ index under the ticker symbol, “ZIPR.” The company’s stock was trading at $5.89 a share today, down 10.6 percent from Wednesday’s closing price of $6.59.
The company’s quarterly earnings had been sliding this year, with second-quarter losses deepening to $1 million, compared with a $200,000 loss during the same quarter a year earlier. ZipRealty had net revenues of $31.3 million for the quarter, up 16 percent compared to net revenues for second-quarter 2006.
“Given the uncertainty of today’s current residential real estate and home mortgage markets, we felt it was prudent to adjust our cost structure and better align to market conditions. Although we will realize a small portion of these cost savings in 2007, the net impact of our plan will be far more evident in 2008,” ZipRealty’s CEO and President Pat Lashinsky said Thursday.
ZipRealty will release third-quarter earnings on Nov. 7, and management will discuss the expected impact of the staff reduction during a call with investors that day.