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Move Inc. Reports Operating Results (10-Q)

August 06, 2010 | About:
Todd Sullivan

10qk

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Move Inc. (MOVE) filed Quarterly Report for the period ended 2010-06-30.

Move Inc. has a market cap of $357.2 million; its shares were traded at around $2.29 with and P/S ratio of 1.7. MOVE is in the portfolios of David Nierenberg of D3 Family of Funds, David Nierenberg of D3 Family of Funds, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

As part of the sale in 2002 of our ConsumerInfo division to Experian Holding, Inc. (Experian), $10.0 million of the purchase price was put in escrow to secure our indemnification obligations (the Indemnity Escrow). Under the terms of the stock purchase agreement, our maximum potential liability for claims by Experian was capped at $29.3 million less the balance in the Indemnity Escrow, which amount was approximately $8.5 million. During 2008, Experian demanded $29.3 million in indemnity payments. We denied liability and a bifurcated arbitration proceeding ensued to resolve the dispute. Subsequent to the completion of the first phase of the arbitration proceedings, on April 20, 2009, the parties settled the dispute and entered into a full release of all claims under which Experian received $7.4 million from the Indemnity Escrow and we received the balance of the escrow of $1.1 million, which is included in gain on disposition of discontinued operations for the three and six months ended June 30, 2009.

Cost of revenue decreased $1.7 million, or 13%, to $11.1 million for the three months ended June 30, 2010, compared to $12.8 million for the three months ended June 30, 2009. The decrease was primarily due to decreased costs of $0.6 million associated with development services previously provided to the NAR during the three months ended June 30, 2009, lower personnel related costs of $0.7 million, and lower product fulfillment costs of $0.4 million associated with our featured products.

Sales and marketing. Sales and marketing expenses decreased $2.5 million, or 12%, to $18.9 million for the three months ended June 30, 2010, compared to $21.4 million for the three months ended June 30, 2009. The decrease was primarily due to a decrease in online distribution costs of $1.6 million, a decrease in personnel related costs of $0.6 million resulting from lower sales commissions, and other cost decreases of $0.3 million.

Cost of revenue decreased $3.5 million, or 14%, to $22.0 million for the six months ended June 30, 2010, compared to $25.5 million for the six months ended June 30, 2009. The decrease was primarily due to decreased costs of $1.3 million associated with development services previously provided to the NAR during the six months ended June 30, 2009, a decrease in product fulfillment costs of $0.9 million associated with our featured products, a decrease in personnel related costs of $0.8 million, and other cost decreases of $0.5 million.

General and administrative. General and administrative expenses decreased $13.5 million, or 39%, to $21.5 million for the six months ended June 30, 2010, compared to $35.0 million for the six months ended June 30, 2009. The decrease was primarily a result of a $8.5 million decrease in non-cash stock based compensation primarily due to the acceleration and modification of options upon the termination of two executive officers and restricted stock awards and options granted to our Chief Executive Officer that were immediately vested during the six months ended June 30, 2009. Additionally, there was a $2.7 million decrease in personnel related costs, excluding non-cash stock based compensation, a $1.8 million decrease in legal fees, a $0.9 million decrease in bad debt expense and a $0.5 million decrease in facilities costs due to the new lease in Westlake Village, California. These cost decreases were partially offset by an increase in consulting costs of $0.9 million.

Net cash used in financing activities of $63.4 million for the six months ended June 30, 2010 was primarily attributable to principal payments on our line of credit of $129.3 million offset by proceeds from our line of credit of $64.7 million. There were additional cash proceeds from the exercise of stock options of $0.5 million, reductions in restricted cash balances of $0.4 million and proceeds from loans payable of $0.3 million.

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