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Letting Air Out of the Bubble

Biz BriefsHomebuilder Hovnanian Enterprises worried industry watchers last week when it backpedaled on its second-quarter outlook. Revising its financial projections, the Red Bank firm said earnings this quarter would be $1.40 to $1.50 per share rather than the $1.55 to $1.80 it had earlier predicted. Hovnanian lowered its full-year earnings outlook by a dollar to $8.40 a share.

The homebuilder attributed the earnings drop to production delays in markets where home deliveries have been postponed, slower sales, higher cancellation rates, increased use of concessions and incentives, and increases in the costs of materials.

For the three months ending Jan. 31, 2006, the company reported earnings of $84 million on revenue of $1.3 billion, compared with earnings of $81.5 million on revenue of $1.1 billion for the previous-year period.

Other homebuilders have cut their forecasts too, including Dallas builder Centex and Beazer Homes of Atlanta. Share prices of most publicly traded homebuilders fell last week; Hovnanian shares fell $4 to about $36 in mid-morning trading on Thursday.

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