TAKING THE PULSE: U.S. home builders' turmoil continued in the latest quarter, as buyers remained glued to the sidelines - many unable to sell existing homes or to secure credit - and mounting foreclosures created competition and softened prices.

That means the financial results for these companies will undoubtedly be bloody, with more losses and charges as builders write down the lost value of land and inventory. Builders continued to cut home prices and throw in incentives - some now playing up the finance angle with no-money down or lower interest rate specials - weakening already depressed margins.

"Clearly, the market's degrading, not improving," said Michael Kahn, senior managing director of Michael P. Kahn & Associates LLC, consultants to home builders and capital sources.

But the sector is thinking about life after the bottom, which isn't unlikely this year: Companies are stockpiling cash and looking for bargain-priced land, preparing to pounce when the price free-fall ends.

"Strategic planning continues," said Paul Prescott, a Deloitte principal and national head of its home-building sector. "Eventually, as your business begins to grow again, you're going to need access to a bank of land."

COMPANIES TO WATCH:

Lennar Corp. (NYSE:LEN) (LEN) - reports June 26.

Wall Street Expectations: Analysts polled by Thomson Reuters expect a loss of 45 cents a share on revenue of $1.11 billion. A year ago, Lennar (NYSE:LEN) had a loss of $ 1.55 a share and revenue of $2.88 billion.

Key Issues: Last quarter, Chief Executive Stuart Miller was grim as he discussed the deteriorating economy: "In the market, in the grocery store, at the pump and in the working world, it just doesn't feel good." Not much has improved for any builder since then. Gasoline prices, food costs and unemployment figures continue to rise.

On a separate note, industry watchers are interested in the cancellation rate. Both Hovnanian Enterprises Inc. (NYSE:HOV) (HOV) and Toll Brothers Inc. (NYSE:TOL) (TOL) recently reported lower rates, meaning fewer signed buyers are walking away. Will Lennar's (NYSE:LEN) number signal a trend?

KB Home (NYSE:KBH) (KBH) - reports June 27

Wall Street Expectations: Analysts project a loss of 85 cents a share and revenue of $695 million. KB Home's (NYSE:KBH) year-earlier loss was $2.26 a share on revenue of $1.41 billion.

Key Issues: This is the first full quarter KB Home (NYSE:KBH) has offered price protection, promising contracted buyers a reduced price if the price tag for comparable homes is trimmed before closing. The results will show if the guarantee is attracting - and keeping - buyers.

Not everyone is optimistic. "I'm not sure anything's going to work right know, " Kahn said.

While other builders are simplifying homes to shave costs, KB Home (NYSE:KBH) continues to tout its design studios, which offer plenty of carpet, counter and door choices. "Even with pressures on affordability, our studio sales remain strong, reinforcing that choice is a key driver for the consumer in making the home- building decision," said Dom Cecere, executive vice president and chief financial officer, at a conference this week.

Standard Pacific Corp. (NYSE:SPF) (SPF) - expected late July

Wall Street Expectations: Analysts anticipate Standard Pacific (NYSE:SPF) will post a loss of $1.26 a share on revenue of $382 million, compared with a prior-year loss of $2.56 on revenue of $695 million.

Key Issues: Standard Pacific (NYSE:SPF) already provided a glimpse of what is to come: In April and May, net new home orders fell 12% from a year ago, and the cancellation slipped to 25%. Not everyone is impressed. The improvement "was achieved through aggressive pricing and discounting, as well as inventory (i.e. spec) liquidation," JPMorgan's Michael Rehaut noted. "As a result, we believe this lesser decline in orders is not indicative of any improvement in market conditions."

For months, industry watchers have feared for the company's future. But late last month, executives announced a multimillion-dollar lifeline from distressed- debt buyout firm MatlinPatterson Global Advisers LLC. One analyst labeled the firm a white night that came "in the nick of time to save" the builder.

(The Thomson Reuters estimate and year-ago net may not be comparable due to one-time items and other adjustments.)

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; dawn.wotapka@dowjones.com

(Kevin Kingsbury contributed to this report.)

    (END) Dow Jones Newswires   06-20-08 1502   Copyright (c) 2008 Dow Jones & Company, Inc.