Beazer Homes USA late Monday announced a series of steps to reduce its cost structure and improve operating efficiencies including job cuts and the suspension of its quarterly dividend, after net new home orders skidded 53% in the fiscal fourth quarter. The homebuilder blamed the tightening of mortgage markets in August and September, which resulted in an "unusually high" cancellation rate of 68%, for the decline. "The housing industry continues to face the most difficult business conditions in over a decade," said CEO Ian J. McCarthy. Although he believes long-term fundamentals remain compelling, McCarthy said, "We must continue to adapt to the realities of the current market by remaining disciplined in our operating approach and continuing to focus on initiatives aimed at responding to what we believe will continue to be a challenging environment in the near-term." To that end, the company, in October, slashed 650 positions, or 25% of its work force, which has declined 50% from its March 2006 peak, in a move that was expected to result in annualized cost savings of at least $30M. Elimination of the $0.10/share quarterly dividend was expected to save $16M annually. Beazer is also continuing to reduce its land holdings. Fourth-quarter results, it said, will include charges of about $230M for inventory impairments and the abandonment of land option contracts and also may take goodwill impairments during the quarter. Beazer is unable to report full financial results because it is in the process of restating results dating back to 2004, as a result of an investigation into accounting mistakes. Beazer shares lost 5.5% to $9 AH following the announcement.
Commentary: NAR Cuts Housing Forecasts Again • Some Thoughts About Beazer Homes and the Housing Crisis • Accounting Problems Plague Beazer Homes
Stocks to watch: BZH. Competitors: TOL, KBH, LEN, RYL, PHM, DHI, HOV. ETFs: XHB, IHB
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.