The Real Story: Ugly Kid Joe

"Mean Joe" Greene was arguably one of the best defensive linemen to play football. As part of the "Steel Curtain," Mean Joe helped the Pittsburgh Steelers win four Super Bowls in the 1970s. Offenses struggled mightily attempting to move the ball on Greene and his teammates.

Management from St. Joe (JOE Quote) tried to imitate Greene's prowess Tuesday, playing defense and spinning the weak quarterly results. But instead of coming across like the Steel Curtain, it was perceived more like a steel colander.

In March, I cautioned investors that St. Joe was likely to miss earnings expectations and sink lower. The stock did just that Tuesday, tumbling 6.5% to $51.50 on heavy volume after the firm reported earnings of 5 cents per share on revenue of $167.4 million vs. the First Call consensus of 28 cents and $208.5 million. Additionally, the company warned that per-share earnings for the full year would be in the range of $1.40 to $1.85 vs. the $1.80 consensus -- which was already 4 cents lower than when my first story ran.

The problems impacting St. Joe are similar to the issues facing many homebuilders -- demand has declined while inventory has spiked. The details shouldn't have been too surprising, given what already has been reported by other companies in the sector like Beazer Homes (BZH Quote), Hovnanian (HOV Quote) and Centex (CTX Quote).

What should have been unnerving to investors, however, was the defensive nature of St. Joe's management on the conference call. CEO Peter Rummell stumbled and stammered his way through several of the more challenging questions. Executives tried to put the best spin on the results that they could, often talking in double-speak or refusing to answer questions outright.

When asked if the company would be delaying any releases of property, CEO Rummell stated, "No, we are comfortable with all of them." He added, "We have adjusted to some degree, sort of the initial inventory in some of them."