In a victory for short-sellers, Willian Lyon Homes ( WLS) fell more than 6% Thursday morning after the homebuilder released slightly disappointing new-order numbers.

The small-cap company, which builds housing communities in California, Arizona and Nevada, said late Wednesday that its new-home orders for the three months ended Sept. 30 were 834, a 27% increase from a year earlier. However, that total was 91 units lower than the estimate of JMP Securities analyst James Wilson, who this morning downgraded the stock from strong buy to market outperform. JMP handles investment-banking services for William Lyon.

"The shortfall was primarily due to a lower-than-expected community count in Phoenix (five this year vs. seven a year ago) as the company sold out faster than expected and was not able to replace its communities on time. We believe the community count issue is temporary and expect the community count in Arizona to be up to eight by mid-2006 given the company's community pipeline," Wilson wrote in his report.

William Lyon said year-over-year new orders were up 64% in California, rose 30% in Nevada and fell 39% in Arizona. William Lyon also said its backlog of homes sold but not yet closed rose 22% in the quarter to 2,299.

William Lyon fell 6.2% to $135.35 in Thursday morning trading. The stock is down 14% since Monday's close.

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