UPDATE:Lennar 3Q Loss Widens, But Sees Profitability On Horizon

(adds preview of fiscal 2010)

 
   DOW JONES NEWSWIRES 
 

Home builder Lennar Corp.'s (LEN) fiscal third-quarter loss widened amid charges as home sales remained weak, but the company said it could return to profitability in fiscal 2010 it the economy continues to stabilize.

There are signs that the sector is recovering from its worst downturn in decades. Customers are returning to the market, lured by fallen home prices, low mortgage rates and a federal tax credit for qualified first-time buyers. But rising foreclosures, rising unemployment and tight credit still pose challenges. The federal credit expires Nov. 30, and without an extension, the market could soften.

Even so, Lennar - one of the U.S.'s largest home builders - has increased the number of home starts, reduced the number of homes in inventory and repositioned itself toward first-time and value-focused buyers.

For the quarter ended Aug. 9, Miami-based Lennar posted a loss of $171.6 million, or 97 cents a share, compared with a prior-year loss of $89 million, or 56 cents a share. The latest period included 76 cents in charges. Revenue decreased 35% to $721 million. Analysts polled by Thomson Reuters most recently were looking for a 46-cent loss on revenue of $774 million.

Gross margin on home sales, a barometer of efficiency, slipped to 15.6% from 18%.

Orders fell 8% from a year earlier, but the company said it was the smallest such decline in nearly three years. Sequentially, orders rose each month. The builder ended the quarter with its highest backlog since August 2008, a positive sign for the future if the deals close.

Deliveries declined 29% from a year earlier, while the cancellation rate fell to 19% from 27%, as fewer buyers abandoned contracts.

Shares closed at $16.54 on Friday and didn't trade premarket. The stock is up 90% this year.

-By Tess Stynes and Dawn Wotapka, Dow Jones Newswires; 212-416-2481; [e-mail]