Toll Bros. profit drops on hefty writedowns

Luxury homebuilder Toll Brothers Inc. said Wednesday its third-quarter profit tumbled, hurt by hefty writedowns and higher-than-expected cancellations as the housing downturn and credit quality concerns continue.

Earnings for the period ended July 31 dropped to $26.5 million, or 16 cents per share, from $174.6 million, or $1.07 per share, a year ago.

The current period's results were weighed by an $88.5 million, or 54 cents per share, in writedowns compared with writedowns of $14.6 million, or 9 cents per share, last year.

Excluding the writedowns, earnings were 70 cents per share.

Analysts surveyed by Thomson Financial, who typically exclude such writedowns, expected a loss of 2 cents per share.

Quarterly revenue dropped 21 percent to $1.21 billion from $1.53 billion in the prior year, but topped Wall Street's estimate of $1.15 billion.

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"We continue to wrestle with the interrelated challenges of softer demand and excess housing supply in most markets," Chairman and Chief Executive Robert Toll said in a statement.

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Third-quarter cancellations totaled 347 units.

"We have experienced a much higher rate of cancellations than at any time in our twenty-one-year history as a public company," Toll said.