HOMESTORE.COM DROPS SHARE PRICES SLIP 16 PERCENT AFTER SECONDARY OFFERING.

Byline: Jason Z. Cohen  Staff Writer

THOUSAND OAKS - Shares of Homestore.com Inc. lost more than 16 percent of their value Thursday after a secondary offering of 8.3 million shares hit the market.

The stock offering raised $447 million for the company and $465 million for other shareholders, but drove the stock price down by more than 20 points.

The Thousand Oaks-based Internet portal's stock closed at $100.875 per share, a decrease of $20.15625 per share from Wednesday's closing price.

The company and its underwriters - Morgan Stanley Dean Witter, Merrill Lynch & Co., Donaldson Lufkin & Jenrette, Robertson Stephens, Chase H&Q and Wit Capital Corp. - set the offering share price at $110 after Wednesday's market close.

Issuing shares at a discount is common, said David Menlow, president of IPOfinancial.com.

``Putting this many shares into the market is not going to be a problem if there is sufficient demand,'' Menlow said. ``It really amounts to a 10 percent discount from the previous night's close.''

A more typical discount is between 3 percent and 5 percent, Menlow said.

``To come up with a 10 percent discount is pretty extreme,'' Menlow said. ``The company filed to come to market with additional shares when (the stock) was at $90. It had run up subsequent to that. It's hard to get investors in at such high prices.''

Menlow said it is characteristic for additional shares to drive the price down. With more shares on the market, the value per share is decreased, he said.

Secondary offerings differ from initial public offerings in that electronic trading allows shares to change hands in advance of the market's opening, Menlow said.

Spokeswoman Karen Fulton said the company is prohibited by Securities and Exchange Commission regulations from commenting on the offering or its results.

CAPTION(S):

chart

Chart: Rise and Fall