December 2, 2008 - Beazer Homes, Atlanta GA

Leave It To Beazer-

Beazer Homes' losses keep growing, its sales keep sliding, and the coming year doesn't look much brighter for the home builder.

Beazer Homes' losses keep growing, its sales keep sliding, and the coming year doesn't look much brighter for the home builder.

Beazer is in critical condition. The Atlanta-based company was knocked out during another fiscal round by the same demons of low consumer confidence, falling prices, a supply glut and lower access to mortgage financing.

Adding insult to injury, Ian McCarthy, Beazer's chief executive, said things have been getting worse since Sept. 30, when its fourth quarter ended.

McCarthy also said that the company should expect that both closing and average sales prices will be lower in fiscal 2009, and that it will again likely incur a yearly loss.

Beazer's investors--or what's left of them--pushed the stock down 7.3%, or 11 cents, to $1.38, in late-afternoon trading, further degrading a financial security that's lost 97.1% of its value since the beginning of 2007. Meanwhile, the SPDR S&P Homebuilders exchange-traded fund rose 5.5% Monday, but has lost 70.7% since the beginning of last year.

Beazer has done much to plug the holes and dump the rising water from its sinking ship. In August, the home builder's stock enjoyed a small gain when it reported slight improvements in its third quarter by limiting investments and keeping home prices low. (See "Home Builder Shares Catch Beazer's Breeze.")

Last year, Beazer asked its bond holders to amend the terms of $1.5 billion in debt so it could avoid default. (See "Beazer's Ending It All.") During this time, McCarthy has also fought off calls for his ouster. (See "Calls Rise To Oust Beazer CEO.") Beyond a failing business, investors have charged McCarthy for allowing the company to violate federal law.

Between July and September, Beazer still managed a loss of $473.9 million, or $12.29 per share, well off last year's loss of $155.2 million, or $4.03 per share.

Sales also tumbled to $712.6 million, from $1.1 billion, while home closings sunk 38.0%.

The company's income tax provision, however, swelled to $334.9 million, compared with a tax gain of $76.6 million last year. Having posted losses for the last four years, the company must reserve against deferred tax assets when it's likely those assets won't be realized.

Analysts surveyed by Thomson Reuters expected a loss of $2.10 per share on sales of $593.4 million.

Original Story - Forbes.com