um, you need lumber to build houses, right? look at what the ceo of weyerhauser had to say today...i don't think i have ever heard such a completely negative outlook:
NEW YORK (MarketWatch) -- One of the largest lumber-producing companies in North America provided a dire outlook Friday that included more deterioration in the housing market and turmoil in the credit market.
Weyerhaeuser Co. said home-building activity is at its lowest level since 1959, with new-housing starts in 2008 at 620,000, down 37% from about 1 million in 2007.
"Not only have we seen a 77% drop in housing starts since 2005's peak level of 1.7 million, but the pace of this decline has accelerated," Chief Executive Dan Fulton said on a conference call with analysts, following the release of the company's fourth-quarter results.
In response to the housing slump, the company shut down veneer and lumber mills in Alabama, letting go about 300 employees as it cuts capacity and reduces cost. Just last month, Federal Way, Wash.-based Weyerhaeuser said it would close two mills in Washington, resulting in a reduction of 221 employees.
But it's not just new-housing starts: turmoil in the credit markets and fear of unemployment has caused people to roll back or cancel home repair and remodeling projects, as consumer confidence sinks to new lows, Fulton said.
"As a result, wood products are barely moving, and what is selling is going for prices substantially below third quarter levels," the CEO said. "These figures demonstrate the complete capitulation of the consumer in the last half of the fourth quarter."
Weyerhaeuser said its loss in the fourth quarter grew to $1.21 billion, or $5.73 a share, compared to a loss of $63 million, or 30 cents a share, in the same period last year. Net sales in the period plunged more than 50% to $1.78 billion from $3.94 billion.
Excluding items, Weyerhaeuser said it would have posted a loss of 99 cents a share for the 2008 fourth quarter. Analysts, on average, expected a loss of 55 cents a share on revenue of $1.83 billion, according to a survey by FactSet Research.
Weyerhaeuser ended the quarter with $2.5 billion in cash and short-term investments.
Shares of Weyerhaeuser, after being down most of Friday's session, ended up 67 cents at $28.03. Over the last 52 weeks, the stock is down nearly 60%.
The annual home-selling season unofficially began after the Super Bowl on Sunday, and to drum up more potential home buyers, builders such as Toll Brothers Inc. and Lennar Corp. have begun offering more incentives with mortgage rates well below the national average.
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