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HORSHAM, PA-Locally based Toll Brothers Inc.'s fortunes continued to fall in the homebuilder's fiscal fourth quarter. Net income was $173.8 million, down 44% from $310.3 million in the same quarter a year ago, and revenue fell 10% to $1.8 billion, down from just north of $2 billion in fourth quarter 2005.

However, for the first time in several quarters, Robert Toll, chairman and CEO, reported tentative signs of hope 15 months into the slowdown. During a conference call he said, "We may be seeing a floor in some markets where deposits and traffic, although erratic from week to week, seem to be dancing on the bottom or slightly above."

He cited the metro DC and Northern Virginia suburbs, which "seem to have stabilized, although at levels much lower than those we have enjoyed over the past few years." The DC Maryland suburban market also seems to be stabilizing, he said, but at higher levels, adding, "It didn't go into the ash can as did the Northern Virginia market. Florida picked up a little in the East Gold Coast primary markets, and Jacksonville picked up a bit in the past four weeks."

Asked if the California was still deteriorating, he said, "no," and pointed to "heart-warming" signs in Northern California, specifically the San Francisco area, over the past four weeks. He also said, "For us, there's been a recent pick-up in San Jose."

There were 585 cancellations for the quarter, which could create increasing margin pressure, he said. For fiscal 2007, Toll projects delivering between 6,300 and 7,300 homes at an average cost of between $660,000 and $670,000.

Following the conference call TOLL stock was trading at $32.91 a share on the NYSE, up slightly more than 3% for the day. The 52-week high of $39.88 was reached on Jan. 11 this year and the 52-week low of $22.22 a share occurred this July 18. According to published reports, homebuilding stocks were the second biggest gainers of the 100 sectors in the Dow Jones index, following Toll's financial report.

Instant Insights /

Toll Sees Glimmer of Hope as Slump Continues

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