Homestore probe leads to ouster of workers

Homestore.com has "terminated or accepted resignations" from seven employees as a result of an ongoing inquiry into its accounting practices, according to a company statement.

Among those affected were three finance and business development employees who had been previously placed on administrative leave, said the statement released late Wednesday.

In a short statement, Homestore warned that it might take additional disciplinary actions as a result of the inquiry. Company representatives did not immediately respond to calls seeking comment.

Homestore admitted earlier this month that it overstated its revenue by as much as $95 million through the first three quarters of 2001. The overstatement was a result of counting as revenue a number of barter transactions where the company traded advertising space for goods and services from other companies. The admission came as part of the company's first report on an internal inquiry that Homestore began last month.

After the report, the company ousted co-founder Stuart Wolff from his position as chairman and chief executive and brought in a new management team, including new chief executive, chief operating and chief financial officers.

The changes at Homestore come after a series of setbacks for the company, which was once one of the few e-commerce stars.

After issuing an earnings warning in October, Homestore reported that its third-quarter revenue was far lower than originally expected, with online advertising sales dropping 44 percent from the previous quarter. With revenue falling, the company announced in late October that it was laying off 700 employees, or 20 percent of its staff, in a reorganization.

Then, in early December, company CFO Joseph Shew resigned, citing "personal reasons," after 10 months on the job.