StJoe (JOE) Shocks-takes charge, exits Florida bldg.

[GaltsGulch]

Here, in the company's words below - "sharpening focus on value creation" . They also would not indicate how many layoffs are coming right away, but number is believed to be substantial.

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17:06 JOE St. Joe Company to Exit Florida Homebuilding as It Sharpens Focus on Value Creation (47.92 +0.03)

Co announced that it intends to exit Florida homebuilding as the company sharpens its focus on strategies expected to maximize the value of its core land holdings. The move will result in a workforce reduction and is made possible by JOE's expanding relationships with local, regional and national homebuilders. In connection with this plan, JOE expects to take a charge to earnings of approximately $10.7 million. This charge consists of approximately $2.3 million for one-time, cash termination benefits to employees and approximately $8.4 million of non-cash charges related to the write-off of capitalized homebuilding costs at several communities. Approximately $9.0 million of these charges will be recognized in the third quarter of 2006.

 

[Beach Goddess]

What all has St. Joe built around the SoWal area?

 

[goofer]

This doesn't sound very good for owners at WC or WS, of which I am one. How will this effect the beach club, golf club, and development of the rest of the property. JOE will definitely not have its eye on the ball as far as owners are concerned. They will now be preoccupied with layoffs and restructuring. The owners weekend for WS owners should be Very interesting. Stay tuned.

 

[SHELLY]

This doesn't sound very good for owners at WC or WS, of which I am one. How will this effect the beach club, golf club, and development of the rest of the property. JOE will definitely not have its eye on the ball as far as owners are concerned. They will now be preoccupied with layoffs and restructuring. The owners weekend for WS owners should be Very interesting. Stay tuned.

Goofer,

You're an owner of JOE stock as I recall. Did you listen to JOE's last conference call? As I recall they addressed continuing work on infrastructure and facilities they "promised" to the folks who bought into their developments and into new developments. I took this to mean that they're going to experience a cash drain at the same time their profit margins were doing a shrinkydink--not good for the bottom line. Of course that was "then" and this is "now" and things most certainly can change. I've never put much trust into companies who "increase EPS" by downsizing--but that's just me.

Owners of the actual properties should blow the dust off of their contracts and start reading the fine print in areas that address the facilities.

 

[goofer]

Very interesting in view of the half a##ed suspension of the buildout. Things should be very quiet at WS with this new thing. JOE has no idea which end is up. All they care about is the stock price. Maybe this is a blessing in disguise....most of the infrastructure is done at WS and the area should be very QUIET. I don't plan to rent but I think those that do may be disadvantaged. But I hope there are some lawyers that are owners b/c JOE seems to be renegging on quite a bit of their promises and intimations.

 

[yippie]

What all has St. Joe built around the SoWal area?

Watercolor, Watersound, The Retreat and there is another one in Inlet Beach, but I can't recall the name.

 

[goofer]

What kind of signal does this send about the New airport? If JOE isn't committed to building and developing why would the really big money and big airline companies come to South Walton . If the biggest Kahuna is pulling in his horns so will the other players. Who knows...maybe this is a good thing.

 

[SHELLY]

But I hope there are some lawyers that are owners b/c JOE seems to be renegging on quite a bit of their promises and intimations.

I suspect most buyers will find that what they thought were "promises" were only printed on their glossy brochures, touted during their sparkling soir?es, or chatted-up by their peppy sales reps. In reality, buyers will probably find the "promises" are oddly absent from the deep, dark reaches of the deed/sales contract--and further--that they signed away their rights to sue, opting instead for "arbitration" in the event of a dispute.

As this tale continues to unwind, stories from former employees about the inner workings of JOE will make for some interesting reading.

 

[goofer]

I think that you have to agree that, as far as WS , WC and other JOE project owners are concerned wherever they are, this is a public relations abortion !!

 

[SHELLY]

I think that you have to agree that, as far as WS , WC and other JOE project owners are concerned wherever they are, this is a public relations abortion !!

I can almost hear JOE's nemesis, Marc Lichtenfeld (theStreet.com), pounding away on keyboard this very minute .

IN MARCH:
Once among the hottest in the country, the Florida market has cooled quite a bit as a glut of houses have come on the market. According to Raymond James analyst Rick Murray, single-family home sales dropped 19% in January, with 18 out of 20 metropolitan areas experiencing year-over-year declines. Additionally, prices have been flat since June. Bank of America's Karin Ford is concerned that the 42% rise in resale inventories since August will make price growth in St. Joe's units less likely this year.

As one of my favorite technical analysts, Gary Kaltbaum, says, the stock looks like the south end of a north bound mule. St. Joe has been in a downtrend since last summer, making lower highs and lower lows. Volume has been strong on the declines and lighter when the stock rises. If the stock breaks $58 (which I believe it will), there isn't support until $48, just above where St. Joe would trade on the basis of its historical valuations.

And for those of you who remain bullish on St. Joe, I have some swampland in Florida I'd like to sell you.


IN JUNE:
Shares of all homebuilders have been pounded like cheap beer at a fraternity house, but St. Joe (JOE:NYSE - news - research - Cramer's Take) stands out from the group -- and not in a good way.

"Rivercamps is a total joke," according to one hedge fund manager who is short St. Joe. The source, who requested anonymity, questions who is in the market to spend that kind of money and to be stuck in "a buggy pine forest on a bay," or at other St. Joe developments that are off the beach, when beach property is available in other parts of the country for roughly the same price or less. He believes the company parlayed its success in the Gulf of Mexico to entice previously successful speculators to buy up lots in much less desirable locations.

St. Joe shares have been crushed, off 48% since their high in July and 27% since that original bearish article in March. With more ugly surprises likely in store over the next few quarters and sentiment turning increasingly negative, I suspect the stock still has a ways to go on the downside. I am maintaining my $31 price target, roughly 30% below Wednesday's close of $44.52.

IN JULY:
However, St. Joe (JOE - news - Cramer's Take) is one housing/real estate name that I have been bearish on since March. An inventory glut exacerbated by desperate speculators looking to get out of their holdings amid falling prices has created a situation where St. Joe is being undercut by its own existing home and landowners. My price target remains $31.