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alstry (35.36)

Are Home Builder Managements Mentally Impaired?

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July 29, 2009 – Comments (4)

RYL reported the following tonight:

Homebuilding revenues decreased 44.6 percent to $261.6 million for the second quarter of 2009

If a over 44% drop in revenue isn't bad enough.....

Loss of $1.70 per share for the quarter ended June 30, 2009

BUT WAIT, HERE COMES THE NUTTY PART:

During the second quarter of 2009, the Company issued $230.0 million of 8.4 percent senior notes due May 2017.

THE MUST NEED THE CASH FOR SOMETHING....IT IS COSTING THEM OVER $17 MILLION PER YEAR, BUT SINCE ITS CAPITALIZED, MANY WON'T SEE IT HIT THE BOTTOM LINE FOR A WHILE....SO WHAT COULD IT BE FOR?????

The Company has engaged PIMCO to invest approximately $400.0 million of its cash in short-term, highly rated securities.

ARE YOU KIDDING ME???  BORROW OVER $200 MILLION AT OVER 8% TO SIMPLY GIVE IT TO PIMCO TO INVEST AT A FRACTION OF THE RATE???

Who in their right mind would do something like that and for what purpose????

Welcome to the era of extend and pretend......

http://finance.yahoo.com/news/Ryland-Reports-Results-for-bw-1999251949.html?x=0&.v=1

4 Comments – Post Your Own

#1) On July 29, 2009 at 5:16 PM, dividendhound (< 20) wrote:

They should all just turn into demolition companies that hold vacant land, or change a lot of the overhang into afforadable housing, which would basically be like a stimulus.  That would fix the housing overhang pretty quick and reduce maintenance costs.  Home prices would stabilize more quickly, maybe. 

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#2) On July 29, 2009 at 5:39 PM, davejh23 (< 20) wrote:

"They should all just turn into demolition companies that hold vacant land..."

That's probably not a bad idea.  In my area, nearly every home more than 5 or 6 years old sits on at least .35 acres.  Then, housing boomed and thousands of 4,000+ sq.ft. homes were built on .15 acre lots.  Now, these homes aren't even worth the cost of construction...AND, some builders are starting to build spec homes again...betting on a quick recovery.  We are far from any real recovery in housing.

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#3) On July 29, 2009 at 6:04 PM, goldminingXpert (29.46) wrote:

to answer the blog question... YES!!! I wish the entire industry would go bankrupt. It is entirely rotten and corrupt to the core!

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#4) On July 29, 2009 at 6:34 PM, OneLegged (< 20) wrote:

GMX, welcome back.

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