Report comment

Hi Reggie,

I've been chewing through your Lennar and Ryland stuff, and I have a question about your cost of sales estimates. You have Lennar's unit cost of sales, excluding impairment, growing at 4.4% in 2008 and 3.0% in 2009. It's this COGS rise, combined with the falling selling prices (-4.1% in 2008 and -4.7% in 2009) that produces the margin deterioration and negative cashflow for the company going forward. However, I would assume that the big writedowns in inventory must also cut cost of sales going forward, no? If so, their margins would be considerably better from here on out I would imagine. Let me know what I'm missing here.