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Author: Har1en Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 34  
Subject: New CEO, comments on earnings Date: 6/18/2007 4:23 PM
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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.

http://tinyurl.com/23x8p4

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.

http://tinyurl.com/2ve9rn

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.

Har1en

Long -- and awaiting another buying opportunity.

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Author: DaveMcC3300 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25 of 34
Subject: Re: New CEO, comments on earnings Date: 6/20/2007 1:26 PM
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Har1en,

Apologies for getting you into this stock. The housing bust is killing us. I bought at $7.48, so I've made zip so far. But housing recovery puts ZIPR right at the front of the market.

I was also surprised that Richard Sommer was kicked out, but, if he was shifting the model, I'm glad he's gone.

The increase in agents is a GOOD THING !! Realtors are hurting worse than the homebuilders. Some of them will find something else to do for a living; others will go for better job security. Those that are good will be accepted by ZipRealty as it grows. Remember, this is basically a start-up business.

Though I would like to have been making some money through stock appreciation at this point, I'm still hanging in there. I don't see much opportunity to pick up shares at a better price. But I've been wrong before. I too would buy more if the share price crashes. It's been so resilient during a terrible house buying/selling market that I doubt we will have a chance.

There isn't any of the others in this sector that I would touch. ZipRealty is the best!

Dave McC

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Author: Har1en Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26 of 34
Subject: Re: New CEO, comments on earnings Date: 6/21/2007 9:39 PM
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Oh --
I'm not going anywhere. I'm waiting for a fall. I'm only down 7% right now. That's nothing. I usually don't even consider buying another third on something like this until it hits a 20% decline.

The housing slump will continue for a while, but I believe that realtors can make money in good or bad markets, much like stock brokers. Right now, people are waiting, but the waiting won't continue forever. As the mortgages start to age on the teaser rates and the poeple who moved to areas they can't afford, I think we'll see some more movement -- more healthy movement, I hope. This should be good for us in ZIPR.

On another note, have you heard of www.ipay1.com? They are a local company near me here in San Diego, CA. They are private now, I believe, and they are based on the ZIPR idea.

I hear lots of ads for them on the radio. I do not hear much from ZipRealty on the radio, though. I think that their Online-dominant strategy for advertising is something they should augment with more radio spots. When you visit a new city, you're more likely to listen to the radio than you are to go online and househunt, unless you're already in the market. I think they need more mindshare.

Har1en

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