I can sympathize with the management of Hovnanian Enterprises
So it was not particularly surprising on Tuesday when Hovnanian pre-released the results of its quarter that ended on Jan. 31 and said that it would take $90 million in charges in connection with its operations in the Fort Myers-Cape Coral area of Southwest Florida. Those charges involve most of the company's August 2005 acquisition of First Home Builders.
The company also said that before the effects of those charges, earnings for the quarter appear to be about $0.20 per common share, compared with $1.25 a year ago, but higher than the $0.05 to $0.10 that it had forecast previously. Beyond the effects of the Florida charges, Hovnanian also said it expects to take about $8 million of charges related to land impairments and write-offs in other markets. Those charges are included in the $0.20 estimate.
Hovnanian management said the company delivered 3,266 homes in the quarter, excluding the 289 homes delivered from unconsolidated joint ventures. Net contracts for the quarter amounted to 2,570, a dip of 23% from the net contracts written in the comparable quarter a year ago. The company will formally release the results of its quarter on March 8.
In commenting specifically on the Fort Myers-Cape Coral market, Hovnanian officials said the company "primarily targets homes designed for first-time homebuyers. This market continues to face increasing resale listings, including many home listings that were recently constructed and purchased by investors." Management also said that "most of the company's other markets have been experiencing a reduction in resale listings over the past few months."
The Florida market also has had a materially negative effect on Bonita Springs-based WCI Communities
The housing market continues to exhibit softness nationwide, with some areas clearly being harder hit than others. Housing starts in January slid by 14.3% from December to a seasonally adjusted rate of 1.4 million units. Further, Florida has been particularly adept at testing builders. In releasing the results of its most recent quarter, Centex
Despite the steady stream of negative news surrounding housing, I urge Fools with longer-than-usual investment time horizons to realize that homebuilding stocks and housing news frequently are disconnected. As such, I believe that such companies as Centex, Toll Brothers
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