Toll Brothers Bell Ringing for Housing/Economy/Ads

Cancellations at one of the country’s leading homebuilders accelerated again in the quarter ended October 31, and revenue declined by 36%.  The company says October worse than September.  Combine this with cautious comments from News Corp and Time Warner, as well as predictions that the mortgage problems will soon spread into the far larger market for asset-backed securities, and it seems safe to suggest that the outlook for the economy–and advertising–is officially getting worse.

Toll CFO:

“Unfortunately, the pace of customer cancellations increased in this fourth quarter…We, and other reporting builders, have observed that October’s activity appeared weaker than September’s. These trends suggest that we still have challenging times ahead

Note also the perspective provided by the once-wildly-bullish Toll Brothers CEO Bob Tolls: Downturns like this usually last several years.  So probably still too early to try to call the bottom.

In the last cycle, the down period lasted from late 1987 until early 1991 [3.5 years]; we have been in the current down period since September 2005.

True, housing is not advertising, but it gets harder and harder to see how the blow up of the economy’s main engie can stay “contained.”  Especially when it’s already exacerbating the downturn in traditional media.  And especially in light of News Corp comments last night (Companies don’t say “could get rough” if they don’t think there’s a very good chance that it could.)

See Also:
News Corp: “Next Year Could Be Rough”
Recession Watch: Stocks, NWS, AOL, Housing…

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