Housevalues Sells Off (SOLD)

| About: Market Leader, (LEDR)

Shares in online real estate marketing company Housevalues (SOLD) plunged on recent guidance. SOLD works with close to 16,000 real estate brokers and mortgage agents as well as consumers who are selling their homes. There are aspects of this business that are very competitive, and there are several good companies providing services on the internet in this industry. The company does have four significant web properties that handle various parts of the home marketing process.

Anyone who reads the daily paper knows that home sales are slowing as real estate prices rise at the same time interest rates do. But, houses are still changing hands at close to a historically fast pace.

Housevalues says that its Q1 06 will be about $26 million on the top line and that for the year revenue will probably not be above $115,000,000. Adjusted EBITDA for 2006 is pegged at $18 million to $20 million.

So, housing sales are slowing and competition for real estate services on line is growing. But, so are the percent of people and agents who use the internet at some stage of buying a home, and this is likely to continue.

SOLD sells at a market cap of $215 million. Take away its cash and cash equivalents and this drops to $130 million. And, this is for a business that could do $115 million in revenue and have $20 million in adjusted EBITDA this year.

Maybe these shares have fallen too far.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He has also been president of, the 10th most visited website in the world at the time, according to MediaMetrix, and the chief executive of On2 Technologies, Inc.