Masco Shares Drop After Weak 4th-qtr Results

NEW YORK (AP) â¿¿ Shares of homebuilding products maker Masco Corp. slid Tuesday after the company announced fourth-quarter results that fell short of analyst expectations, dimming hopes for a robust recovery in its long-battered home supply business.

THE SPARK: Masco Corp. said late Monday that it posted a loss of 9 cents per share in the three months ended Dec. 31, excluding costs for litigation and other one-time items. The same figure in the last three months of 2010 came to a loss of 8 cents per share.

Wall Street analysts polled by FactSet had expected a narrower loss of 7 cents per share, and their estimates have worsened recently. At the end of January, analysts expected an adjusted loss of 2 cents per share.

Meanwhile, Masco's quarterly revenue rose 1 percent to $1.74 billion. Analysts expected $1.76 billion.

THE BIG PICTURE: The housing slump that began in 2006 stalled construction. That's hurt Masco, which makes home fixtures like cabinets and plumbing that are installed in new housing projects, or purchased when homeowners renovate their houses.

And even if real estate improves in 2012, the glut of foreclosed properties on the market may depress demand for new housing and materials.

Masco did not provide specific earnings guidance for 2012, but CEO Tim Wadhams said that the company's efforts to cut costs and strengthen its balance sheet should improve Masco's results in 2012 even if the housing market stagnates.

THE ANALYSIS: Raymond James analyst Sam Darkatsh on Tuesday downgraded Masco to "Underperform" from "Market Perform."

Darkatsh said in a note to clients that although Masco's shares have rallied on hopes of a housing market recovery this year, his outlook for construction and remodeling are modest because of the many foreclosed homes on the market, high unemployment and other factors. Moreover, about 20 percent of the company's sales came from Europe in 2011, where the economy is worsening because of the debt crisis, he said.

Darkatsh also criticized Masco's operations, saying rival companies ran their businesses better.

Wadhams said in a statement that Masco's efforts to cut costs and increase sales didn't boost results as quickly as the company had expected in 2011.

SHARE ACTION: Shares dropped $1.76, or 13 percent, to $11.47 in afternoon trading. Still, Masco's stock has jumped 39 percent in the past three months. Shares remain well off their 52-week low of $6.60 from October.

But the stock has a long way to go before recovering its value before the housing bust. Shares peaked at $38.43 in February 2005.

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