The "rich" ringing Toll's Bell
From Toll's report today:
The average price of net signed contracts in the FY 2008's fourth
quarter was approximately $495,000 compared to $579,000 in
FY 2008's third quarter. This decline was due to the higher
average price of cancelled units in FY 2008's fourth quarter than
in FY 2008's third quarter. The average price of cancelled units
in FY 2008's fourth quarter was approximately $785,000 compared to
$606,000 in FY 2008's third quarter.
Ponder the above for a second...... The average price of a net signed contract was $495K and the average price of a cancelled home was $785K. How much discounting do you think Toll is doing to move houses?????
And just think, Toll was one of the person known as FloridaBuilder's favorite HBs....can you imagine how the not so favorite HBs are doing??????
Here is another snippit:
The Company's FY 2008 fourth-quarter net contracts of 539 units,
or approximately $266.7 million,...... ``While we have not yet finalized our impairment analysis, we estimate that pre-tax write-downs related to operating communities, land and land options, and joint ventures in FY 2008's fourth quarter will be between $120 million and $220 million.
So now Toll is impairing over $200K per net ordered home and potentially up to over $400K. It could be the highest number in the industry. This hopefully gives you a bit of perspective why impairments really do count.....and in come cases count really big......especially on a per home basis.
Could you imagine ifToll simply sold the homes for $100K each how many homes the company would sell and how large his impairments would be?????
In case you want to know the simply solution....stop building homes for a while.....we have a few million too many. Once we don't have too many...maybe builders can build at a profit again. In the mean time....watch the builders do the two step trying to hide the losses through the repeated one time impairments.