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Hovnanian has no plans to go private, CFO says
SAN FRANCISCO, Sept 20 (Reuters) - Hovnanian Enterprises Inc.'s
<_HOV.N_ (aol://4785:HOV/) > chief financial officer on Tuesday said
the No. 7 U.S. homebuilder has no plans to go private, though fears
of a housing bubble may be weighing on its shares.
"We want to remain a public company," said the CFO, Larry Sorsby, at a
Bank of America investment conference. "It would probably be easier
for us to go private than any other (big homebuilder) because of the
tremendous insider ownership that we already have, but we would be a
highly leveraged company, or the whole company would (have)
partners. You should not think Hovnanian is going to lever up to go
private."
Shares of the luxury homebuilder have fallen 17 percent in the last
two weeks, after Hovnanian reported third-quarter profit that missed
analyst forecasts by a penny per share, and forecast fiscal 2006
earnings of $8.05 to $8.40 per share, below the average $8.50
forecast.
Hovnanian shares fell $1.68, or 3.2 percent, to $51.19 in Tuesday
trading on the New York Stock Exchange.
Based in Red Bank, New Jersey, Hovnanian builds upscale homes,
particularly in California and the U.S. Northeast, where prices have
posted some of the strongest gains in the recent housing boom.
But as home prices rose, borrowers hoping to buy pricier homes turned
increasingly to adjustable-rate mortgages, which have lower initial
rates, and other newfangled mortgages that let them buy homes that
they otherwise couldn't afford. This helped fuel higher prices,
leading to growing fears of a housing bubble.
However, 11 rate increases by the U.S. Federal Reserve, including one
on Tuesday, have made even ARMs less attractive, forcing determined
home buyers to economize elsewhere and, investors fear, hurting
homebuilders.
Sorsby said Hovnanian isn't seeing such economies, although he again
said home price appreciation has moderated.
"The next thing I would expect to see is (for a purchaser) to buy the
house with less options and upgrades," he said. "Logic says that's
what will occur. We have not seen that happen yet."
Sorsby said Hovnanian has made on average three acquisitions a year
for the last five years, and is looking for more. He cited Las Vegas,
the Pacific Northwest and Denver as places where he would like the
company to expand.
09/21/05 00:46 ET
SAN FRANCISCO, Sept 20 (Reuters) - Hovnanian Enterprises Inc.'s
<_HOV.N_ (aol://4785:HOV/) > chief financial officer on Tuesday said
the No. 7 U.S. homebuilder has no plans to go private, though fears
of a housing bubble may be weighing on its shares.
"We want to remain a public company," said the CFO, Larry Sorsby, at a
Bank of America investment conference. "It would probably be easier
for us to go private than any other (big homebuilder) because of the
tremendous insider ownership that we already have, but we would be a
highly leveraged company, or the whole company would (have)
partners. You should not think Hovnanian is going to lever up to go
private."
Shares of the luxury homebuilder have fallen 17 percent in the last
two weeks, after Hovnanian reported third-quarter profit that missed
analyst forecasts by a penny per share, and forecast fiscal 2006
earnings of $8.05 to $8.40 per share, below the average $8.50
forecast.
Hovnanian shares fell $1.68, or 3.2 percent, to $51.19 in Tuesday
trading on the New York Stock Exchange.
Based in Red Bank, New Jersey, Hovnanian builds upscale homes,
particularly in California and the U.S. Northeast, where prices have
posted some of the strongest gains in the recent housing boom.
But as home prices rose, borrowers hoping to buy pricier homes turned
increasingly to adjustable-rate mortgages, which have lower initial
rates, and other newfangled mortgages that let them buy homes that
they otherwise couldn't afford. This helped fuel higher prices,
leading to growing fears of a housing bubble.
However, 11 rate increases by the U.S. Federal Reserve, including one
on Tuesday, have made even ARMs less attractive, forcing determined
home buyers to economize elsewhere and, investors fear, hurting
homebuilders.
Sorsby said Hovnanian isn't seeing such economies, although he again
said home price appreciation has moderated.
"The next thing I would expect to see is (for a purchaser) to buy the
house with less options and upgrades," he said. "Logic says that's
what will occur. We have not seen that happen yet."
Sorsby said Hovnanian has made on average three acquisitions a year
for the last five years, and is looking for more. He cited Las Vegas,
the Pacific Northwest and Denver as places where he would like the
company to expand.
09/21/05 00:46 ET