To: Scrapps who wrote (20875 ) 6/12/2000 10:00:00 AM From: DMaA Read Replies (1) | Respond to
Looks like folks have stopped building houses:Boise Cascade Corp. (BCC) 26 5/16: One week after the company said that it would cut back on production at several western sawmills in June and July due to higher imports and excess inventories, this integrated manufacturer and distributor of paper and wood products warned that Q2 results will fall well short of market expectations. Late Friday, Boise Cascade announced that Q2 results would be well below Q1 earnings of $0.60 per share and year-ago profit of $0.52 per share. Hence, Boise Cascade expects Q2 results to be at least $0.19 below the recently revised First Call estimate of $0.71 per share, or 26.7% below current market expectations. This is quite a miss, even though last week profit projections were lowered from a previous mean estimate of $0.76 per share on the production cut back announcement. This large miss is indicative of the impact that a tighter monetary policy is starting to have on the housing market and the economy as BCC cited higher interest rates among the reasons given for the profit miss. The company also cited easing residential home construction and strong industry production for reducing prices for lumber and structural panels. These latter factors are also prompting its building materials distribution business to revalue inventories to current market prices, putting additional pressure on bottom line results. To be fair, the stock is already down 29% from a recent high of 37 achieved on May 15. Thus, investors have been reading the tea leaves and reacting to the changing construction climate brought on by the hikes in interest rates. Nonetheless, the stock will fall further this morning as in pre-market trading the shares are quoted at least 50 cents below Friday's closing price. The bottom may be near for this stock, but don't expect an immediate rebound soon as the Fed appears to be content to squeeze more excess from the economy through further rate hikes which will continue to handcuff the company's building materials distribution business. - Raul Nicho, Briefing.com
