the homebuilder was hit by a larger-than-expected spate of defaults. About 80 homes valued at $48 million failed to close during the quarter.Despite this poor performance and probable industry-wide decline the CEO sounded very optimistic.
WCI also raised its tower default rate to 4%, about double its usual average, after experiencing higher-than-normal defaults at one of its towers in northwest Florida.
New orders for homes and condos are projected to plummet 80% below the total reported in the same quarter a year ago. The 60%-to-65% drop "in the value and number of traditional home new orders" reflects the summer sales slump compared to the 40.5% to 43.5% year-over-year new order shortfall from the second quarter of this year.
"With the current slowdown in demand, we believe we own sufficient land to support our operations through the foreseeable future. We have concluded that it is more prudent at this juncture to apply our cash flow from operations primarily towards debt reduction and stock repurchases," Starkey added.
You're bleeding cash, suffering losses and you "claim" you're going to buy back stock. Yeah right, I'll believe it when I see it! Especially since insiders have been selling millions of dollars worth of stock in the past 12 months.
And their SEC fillings show that their stock repurchase program is more of an option speculation.
In connection with its previously announced common stock repurchase program, WCI Communities, Inc. (the "Company") entered into an agreement with Citibank, N.A. on September 15, 2006 pursuant to which the Company may enter into a series of capped one-year call option transactions with Citibank, N.A. ("Citibank") with respect to up to 5,000,000 shares of its common stock. The Company has agreed to pay Citibank. approximately $25 million if the capped call option contracts are established for the entire 5,000,000 shares. Any option payment will be accounted for as a reduction to shareholders' equity.
Sounds like one bad move after another.
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