Despite the $807.2 million sale of its 49% stake in its French operations and despite a $307.1 tax benefit, KB Homes managed to still lose more than $35 million for the quarter. That is pretty bad. Extract one time gains (they have nothing else to sell besides underwater land and houses, seriously), they lost more than $780,000,000. That makes Lennar's record historical loss look like out performance, and Lennar is a bigger company. Now, these numbers have been calculated from press releases, and I haven't actually looked at their filings, but still....
KB Homes wrote down $690.1 million related to inventory and joint-venture impairments and the abandonment of land option contracts, and a $107.9 million goodwill impairment. Their revenue dropped 32% to $1.54 billion. Now if you take a simple analytical glance, their impairments for the quarter total 52% of their quarterly revenue, which is dropping at a rate of over 30% while their impairments are increasing at what is probably a faster rate. According to press releases,they only have $400 million or so of cash and this situation is at least 6 to 8 quarters from improving. By all accounts, including theirs, it is getting much worse.
If their is anyone left who feels these companies are a steal from a book value perspective, this one's book value just took a 29% haircut - and that was just for the quarter. They took one last quarter too, but it was masked by one time gains from the sale of an operating asset. This time around the losses were too big to hide. Wanna bet they will be taking several more? Centex and Hovnanian are offering 50%+ discounts on inventory while the general market is dropping by more than 8% at an increasing rate and mortgage bankers are getting tighter than frog ass... Well, I am sure you get the picture.
The consensus estimate was for a $.72 loss. I'm assuming everyone was smart enough to exclude one time gains and benefits, but I doubt if that was consistent. It appears the consensus should have been a whole lot more.
Again, that's what you get by going with the consensus. Hey, the sell side analyst and consensus games make it easy for a company that lost nearly a $1 billion for the quarter to say they had an upside surprise, which is what I am hearing on some sites.