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Keep in mind that this is one of the three best run of all the public homebuilders (NVR, TOL, and MDC), and they have what I consider the most respectable, straightforward and honest CEO in the business. This is at least from what I have heard him say in the press and conference calls - no BS, no contradictions, and fully admits the current RE situation - despite the fact his company is one of the best positioned, he says the future looks dire. Hovnanian's CEO on the other hand, whose company's financials are quite bad, has called a bottom on many an occasion and has shown that he was not even aware of a market top, at the market top - Credibility is the Key to Success for a CEO – Hovnanian has Lost that Key: A letter to Mr. Hovnanian (notice the difference in share price between TOL and HOV). Despite my appreciation for Toll's CEO, they have reported some pretty bad numbers. They are still kicking out positive cash flow, but they are losing a fortune on their inventory. I am sure they will be negative cash flow by the end of '08.

I say this because this portends what I have been alleging for some time now - this may be the demise of the majority of the big public home builders. The binging on debt at the top of the market is, well... bad for business. I am not going to prognosticate who will make it and who will not, but I can tell you it will be a rough ride for all, and quite a few will go belly up.

From the

Toll Brothers Swings to Loss
On Land Value Write-Downs

December 6, 2007 5:29 a.m.

Toll Brothers Inc. Thursday said it swung to a fiscal fourth-quarter loss of $81.8 million, or 52 cents a share, from a year-earlier profit of $173.8 million, or $1.07 a share, due to more write-downs of land values amid the continuing housing downturn.

Results for the quarter ended Oct. 31 included pretax write-downs of $314.9 million, or $1.22 a share. Year-earlier results included $115 million, or 42 cents a share, in land-related write-downs.

Excluding write-downs, Toll Brothers earned 72 cents a share, compared with $1.49 a share a year earlier.

The Huntington Valley, Pa., luxury-home builder said total revenue fell 35% to $1.17 billion from $1.81 billion.

On average, analysts polled by Thomson Financial expected a loss of 77 cents a share on revenue of $1.17 billion.

Backlog as of Oct. 31 was $2.85 billion, down 36% from $4.49 billion.

Toll Brothers said it isn't providing forecasts for fiscal 2008 earnings, but predicts revenue to be below that of fiscal 2007.

Toll's shares closed Wednesday at $20.72.