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Subject:  New CEO, comments on earnings Date:  6/18/2007  4:23 PM
Author:  Har1en Number:  24 of 34

I just saw this because I was checking up on ZIPR's news over the last few months -- I thought at first I was misreading something.

As of June 6th, ZIPR canned Richard Sommer and promoted the old president to CEO. The new fellow's name is Patrick Lashinsky. Sommer's been kept on as a board director, so he'll be around if Lashinsky wants to ask him to return the keys to the executive toilet.

Also, quarterly numbers came out in May that I had not seen yet. Bad, but not horrible. About as expected in this environment, I would say.

I noticed that they had a 26% increase in the number of agents they keep. I worry about this -- what's to prevent these agents from taking salary now and then jumping ship when the next big rise in home prices hits?

The 26% increase in agents yielded a rise in closed transactions of only 15%. This makes some sense, as the new folks take a while to get ramped up.

They still have 85MM in cash, and no debt yet, so they're ready for more expansion during this down time. That is exciting.

They have guided for a 13MM loss this year. This is disquieting, although they have the cash to cover it.

I can understand being bargain realtors, but I worry that they are giving away too much money. For them to make money, they will need to increase the average transactions or the average deal value for their agents.

At this point, adding more agents merely increases their losses, as they pay out more in operating expenses and salaries than they make.

This cannot continue indefinitely, and if the market drops further, they really don't have much cushion. I estimate that they have 4 to 6 years to go before they burn through all of their cash. Will the market turn around at this 5 year mark? I figure it will, actually. But it would make me feel better if they were making some income, or just breaking even during this time of expansion and market weakness.


Long -- and awaiting another buying opportunity.

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