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Huge Writedowns Hit Toll

The company says some big markets still haven't stabilized.

Toll Brothers (TOL) - Get Toll Brothers, Inc. Report said first-quarter revenue dropped 19% from a year ago, missing the Wall Street estimate.

The Horsham, Pa., homebuilder said revenue dropped to $1.09 billion from $1.34 billion a year ago, missing the $1.17 billion Thomson Financial analyst consensus estimate. Toll said its quarter-end backlog plunged 30% from a year ago to $4.15 billion.

``It appears that the pace of cancellations is starting to abate," said CEO Robert Toll. "First quarter FY 2007 cancellations totaled 436 versus 585 in fourth quarter FY 2006 and this quarter's cancellation rate of 29.8% was lower than the 36.9% cancellation rate last quarter. However, we are still well above the Company's historical average of about 7%."

But Toll said it expects first-quarter writedowns could total $60 million to $160 million or more, as markets such as Detroit, Minneapolis, Chicago, Reno, Nev., and parts of Florida "may not yet have stabilized." Toll said full-year writedowns would "significantly exceed the estimates in the guidance we provided in December 2006."

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