Centex shares slump on loss, outlook

Centex shares slump on loss, outlook

	Published : Wed, 24 Jan 2007 21:53 By : Agencies Print this Story

DALLAS (AFX) - Shares of Centex Corp. slipped Wednesday after the homebuilder reported its first ever quarterly loss in what the chief executive termed the toughest housing market in 25 years.

'It's a tough market, and it's going to remain tough for a while,' Chief Executive Timothy R. Eller told analysts during a conference call Wednesday.

Centex has already cut its work force by 17 percent since last March 31, when it had 18,544 employees. Eller said more employees will go in the next three months, bringing the 12-month reductions to 30 percent -- which would be more than 5,500 workers.

Centex shares fell $1.08, or 2 percent, to $53.02 in afternoon trading on the New York Stock Exchange. The shares fell as low as $52.21 before regaining ground.

The stock of Centex and other homebuilders had risen Tuesday after D.R. Horton Inc. reported a profitable quarter and Goldman Sachs upgraded the sector.

But after the stock markets closed Tuesday, Dallas-based Centex reported that it lost $228.1 million, $1.90 per share, in the Dec. 31 quarter, a reversal from a profit of $329.3 million, or $2.49 per share, a year earlier.

Revenue fell 7 percent, to $3.28 billion. Home closings and profit margins also dropped, and housing starts plunged by more than one-third, to 7,520.

The company said it expected to break even in the January-March quarter including 65 cents per share in option walk-away costs.

Homebuilders are cutting inventory and expenses to ride out a slump in home prices that began early last year. Potential home buyers are struggling to afford new homes, and trade-up buyers are having trouble selling their current houses in the soft market, industry officials say.

Centex officials said Wednesday that many customers were canceling later in the deal, more than 150 days after signing a contract. As a result, the company was selling more houses that were built 'on spec' instead of customized for a particular customer.

Closings were weakest in the Midwest but improved 3 percent on the West Coast. Sales rose sharply in the San Francisco Bay Area and around Sacramento, Calif., although prices fell -- down 35 percent in Sacramento, said Chief Financial Officer Catherine R. Smith.

'There are some markets, especially those that started into the downturn early, that are finding some stability,' Smith said.

Eller added a word of caution, saying that despite some hopeful signs, 'it's still too early to call the bottom.'