This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

WCI Dodges Heat With Writedown Strategy

With the heat on from its creditors, troubled Florida condo developer WCI Communities (WCI) is scrambling to look as healthy as possible.

While the company can't hide its weak cash flows, it may be employing unusual accounting assumptions to delay large land impairment charges that would reduce book value further.

WCI's shares have plunged 75% in 2007, as the company recorded $119 million in losses for the first nine months of the year. Not even an equity investment and a board shake-up by billionaire Carl Icahn could help the stock.

At around $4 per share, WCI trades at just 20% of book value, reflecting investors' liquidity concerns and skepticism over the value of the company's assets. It has a market capitalization of about $191 million.

Last week, Moody's cut WCI's credit rating to junk, citing the builder's weaker-than-expected cash flow generation and continued violations of bank covenants in its third quarter.

Most of WCI's single-family homes and condos are located in Florida, where the housing market went from red-hot to over-cooked in recent years, sending housing prices and land prices plummeting.

As prices drop in Florida and other formerly hot markets, homebuilders have been forced to record billions of dollars in inventory impairment charges to reflect the deteriorating value of housing communities and land investments.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
DHI $26.90 -0.07%
LEN $48.41 -0.70%
TOL $37.75 -0.76%
AAPL $131.64 1.20%
FB $80.53 -0.02%


DOW 18,285.74 +0.34 0.00%
S&P 500 2,130.82 +4.97 0.23%
NASDAQ 5,090.7940 +19.0510 0.38%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs