A homebuilder had some new out after the bell. "Hovnanian Enterprises, Inc. announced today it now expects its 2006 second quarter earnings to be in the range of $1.40 to $1.50 per fully diluted common share, compared with the Company's previous guidance of $1.55 to $1.80."

"In addition, Hovnanian revised projections for fiscal 2006 ending October 31, 2006. The Company now anticipates its fully diluted earnings per common share for fiscal 2006 will be in the range of $7.20 to $7.40...lower than the Company's previous guidance of $8.05 to $8.40 per share."

"'Our anticipated results for our second quarter and the remainder of fiscal 2006 reflect smaller year-over-year increases in earnings than we had anticipated, primarily due to continuing production delays in several markets that have postponed deliveries, a slower recent sales pace, higher cancellation rates, more pronounced use of concessions and incentives, and material price increases,' commented CEO Ara Hovnanian."

"'When we release results for our 2006 second quarter on May 31st, we expect to report approximately a 20% decline in net contracts. As discussed above, one factor that has negatively influenced our recent pace of net contracts is the sequential increase in our cancellation rates over the past two quarters,' commented Mr. Hovnanian."

"'Typically our second quarter cancellation rates are lower than those of our first quarter, which was not the case this year. While the number of net contracts recorded in our second quarter increased compared to our first quarter net contract results, market conditions have slowed in certain markets and we did not experience as strong a second quarter sales season as we have traditionally seen."

"'We believe the higher cancellation rates, in addition to an increase in resale listings and increased use of sales incentives in certain markets are temporary aberrations as certain markets work through the increased level of resale homes for sale,' he said."

"'As the housing market has continued to cool off from white-hot levels of previous years, we have renegotiated and even walked away from deposits on several parcels of land that we control through options. Approximately $5 million of write-offs of deposits and related costs is built into our revised second quarter guidance.'"

"'Although we have not needed to use this tactic as much in recent years, we have employed it successfully in prior slowdowns. We are confident that our strategy to control land predominantly with options will allow us to better manage our inventories in a slowing housing market,' concluded Mr. Hovnanian."

"The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia."

"The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes."