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LOS ANGELES-Homestore.com, one of the relatively few Internet real estate sites to have so far survived the high-tech meltdown, says it will lay off 700 of its workers and that third-quarter results will fall below Wall Street’s expectations.

The company was formed about four years ago to market homes and real estate services over the worldwide web. It quickly garnered about 95% of all US home listings, thanks partly to its ties to the National Association of Realtors and the National Association of Home Builders–the two largest trade groups involved in America’s residential real estate market.

Homestore was still recording strong revenue growth into the start of this year, even as many other real estate web sites continued to cut back or had already gone out of business. In fact, some analysts say, Homestore actually benefited from the consolidation because it eliminated many of the company’s competitors while also allowing the firm to pick up those with the brightest outlooks for pennies on a dollar.

The 700 layoffs equate to about 20% of Homestore’s workers, most of whom are headquartered here in this community on the northwest edge of LA county. “While the reduction in staff is difficult, it is necessary to ensure the continued strength of the valuable franchise that we’ve established over the past five years,” says Stuart Wolff, Homestore’s chairman and CEO.

Some analysts had been cutting their forecasts for Homestore’s earnings even before Wolff’s announcement. On Monday, USB Piper Jaffray analyst Safa Rashtchy not only reduced his forecast but also slashed his target price on the shares to $12 from $45, citing Homestore’s weaker advertising revenue outlook and slowing subscriber growth.

In early afternoon trading in New York Friday, Homestore’s shares were down 30 cents, or 4.8%, to $5.95. It traded as high as $43 within the last year.

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