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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (68816)	8/25/2006 10:05:16 AM
From: ild	Respond to of 110194

H&R Block Shares Decline After Announcement of Loss Provision By Yalman Onaran Aug. 25 (Bloomberg) -- H&R Block Inc. shares fell as much as 11 percent the day after the largest U.S. tax preparer said it will set aside more money for losses on its mortgage loans as defaults rose in the first quarter. The shares dropped $2.27, or 10 percent, to $20.52 at 9:39 a.m. in New York Stock Exchange composite trading, after reaching $20.20 earlier today. The company said yesterday it will record a $102.1 million provision in the first quarter for possible losses linked to mortgages. UBS AG analyst Kelly Flynn downgraded the stock today to ``neutral'' from ``buy.'' Mortgage lenders are feeling the contraction in the housing market after the Federal Reserve increased the benchmark short- term U.S. interest rate to 5.25 percent from 1 percent in the past two years in an effort to contain inflation. New-home sales in the U.S. fell more than economists forecast in July and the number of unsold houses climbed to a record, the Commerce Department said today. ``Even if HRB has already tightened standards to address prepayment risks, defaults on loans originated in last 4-6 months will worsen,'' Flynn wrote in a report. ``We also worry that worse than expected experience on new loans provides further downside risks.'' H&R Block's Option One Mortgage Corp. packages its loans and sells them to investors. The unit has an obligation to buy the loans back if borrowers default during their early payment stage, typically one-to-three months after taking out the loan. The company saw an increase in those defaults in the first quarter ended on July 31, spokesman Nick Iammartino said yesterday. Possible Losses The Kansas City, Missouri-based company said the money set aside for possible losses from reselling the loans will total $61.3 million after taxes, or 19 cents a share. Before today, H&R Block shares had declined 17 percent in the last 12 months while the S&P 500 index gained 7.2 percent. The tax preparer has been beset by regulatory probes, software failures and accounting errors, losing market share to rival Jackson Hewitt Tax Service Inc. In June, H&R Block reported that its net income declined 21 percent in fiscal 2006 to $490 million. Pretax profit from mortgage lending fell 35 percent to $322 million. Mortgage lending also contributed a smaller share of H&R Block's revenue, declining to about 25 percent from 28 percent. Some H&R Block shareholders have been pressing Chief Executive Officer Mark Ernst to sell the mortgage and investment- services units, according to Flynn. Divestitures would allow H&R Block to focus on its tax-preparation business, she said in a June report. The company is scheduled to report first-quarter income on Aug. 31.

To: orkrious who wrote (68816)	8/26/2006 3:18:18 PM
From: RJA_	Read Replies (2) \| Respond to of 110194

>>>Those that are not really willing to actually do anything are quite quick to criticise. >>You make a very good point. I don't have the stomach to get involved. Even if I wanted to I have too many skeletons in my closet to succeed in an era of one minute sound bites. I am sure that does make it easier for me to rail against the system from my computer. However, it doesn't change the fact that the system is completely broken and future generations are going to have to live a lower standard of living until it is fixed. I agree, but assume you mean here in US. In some other places std of living may actually improve... unless we have the complete breakdown that TJ occasionally mentions by abbreviation. I think the foremost issue impacting standard of living is overpopulation. It is not being addressed because of biology and religion. If we could cut world population by 90%, keep it there, and continue developing technology, resource wars might be a thing of the past... and perhaps everyone could have a decent living standard... and enough space to live in. Of course, that will not happen unless nature unleashes her own reduction mechanism. I doubt we will even stabilize world population. If that doesn't happen, the likelihood of nature getting involved increases.