Homebuilder Lennar (LEN) missed analyst estimates due to massive write-downs of its property assets.
LEN reported a disappointing 97-cent loss, of which 76 cents were due to asset valuation adjustments. While gross margin improved from last quarter, sales were down 35% year over year. New home orders were down 8%. Order back log nevertheless rose to its highest level since August 2008.
While the company’s cancellation rate has come down from 27% last year, it still remains high at 19%.
Management believes business is improving, but the situation clearly remains challenging. Lennar is likely to keep losing money right through 2010 (as per consensus), which will exacerbate the company’s struggle to reduce its sizeable debt burden.
With LEN shares sitting near 52-week highs, this quarter’s second-derivative (“less bad”) improvements might not cut it.