Friday, January 25, 2008

Positive spin on otherwise awful earnings for Lennar

Keep one thing in mind, Lennar (and the rest of the homebuilders) were making money hand over fist the last 5 years and paying lots of taxes. these huge losses they are taking now not only clean up their balance sheets but my guess is they will result in tax refunds which will come back onto the balance sheet. Also, while they are writing down the value of their land holdings (using overly conservative valuations), when the market improves these land holdings will be marked back to market and that too will come back onto the balance sheet. So net net, no need to hold a telethon for these guys. They will weather the storm and be positioned for when the market improves. moishe's take.

MIAMI (AP) — The Lennar Corporation, the home builder, reported a $1.25 billion fourth-quarter loss on Thursday — its biggest ever — as a slowdown drove home prices lower and the company took a write-down on land.

Lennar also reported a $1.9 billion loss for all of 2007. And with few signs of market improvement, the company said it was aggressively trying to generate cash and reduce inventory while taking heavy impairment charges.

The quarterly loss was $7.92 a share, compared with a loss of $1.24 a share, or $195.6 million, a year ago. Lennar lost $513.9 million in the third quarter. Excluding a charge of $7.50 a share to write down the value of land options, the company would have lost 42 cents a share in the quarter.

Revenue fell 49 percent to $2.18 billion, from $4.27 billion in the 2006 period, as home deliveries fell 50 percent to 7,044 homes, and new orders slid 50 percent with a cancellation rate of 33 percent.

In the fourth quarter, revenue from home sales was halved to $2 billion compared with the same period in 2006. The average sales price of homes decreased to $291,000, from $302,000 a year earlier.

1 comment:

Morty said...

So I will now add Lennar to the list of people - Moishe, you're already on it - whom I do not stay up at night worrying about.