Hear that sound? [Cue the crickets.] That's what you hear when this company's operations take an abrupt nosedive as the market for their products gets whittled away to unprofitable levels.
A simple glance at Weyerhaeuser's
Pre-tax earnings contracted across every operating segment, with the wood products and real estate divisions posting enormous losses. Lower sales volumes led the wood products segment to a $146 million loss. Heading into the typically slower fourth quarter, the company expressed no optimism for the near-term outlook, and expects even greater losses for the fourth quarter.
As for real estate, asset impairments of $235 million drove the segment to a $316 million loss for the third quarter. That news alone would be reason enough to steer clear of this company for a while, but management expects home prices to fall still further and anticipates more substantial losses in the fourth quarter.
There are only so many negative words in the English language, and I think most have already been used to describe the state of the housing market. Weyerhaeuser's outlook is weyery bad, but smaller competitor Louisiana-Pacific
The moral of the story is: Run as far away from the homebuilding and related materials sectors as fast as your Foolish feet will take you. Not even a move to REIT status as Rayonier
The Lumber, Wood Production tag in Motley Fool CAPS lists 13 companies. Join the free online community of talented investors today, and help warn fellow Fools about the prevailing weakness in this sector.
Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns no shares in the companies mentioned. The Motley Fool has a disclosure policy.