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

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

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.

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.

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. :idontno: 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.

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.

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.

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.

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 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.

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.

The first round of lay-offs already took place about a month ago.

When I turned on the TV this morning, CNBC was just finishing up a story on St Joe that I missed. I knew if I logged on here that you guys would have it covered ... and boy on boy, what a story😱.

Maybe there is a silver lining ... if Joe isn't plowing tons of new houses onto the market, maybe the backlog of inventory in South Walton can be worked off faster(?)

Although, yesterday, as each of the builders, one by one, downgraded their expectations for the year, they all pointed to deteriorating consumer sentiment. So now in SoWal we have the big player saying that the market now bites SO BAD, that he is getting out of the business entirely. So in addition to deteriorating buyer sentiment, SoWal now has to deal with deteriorating builder sentiment ... which could lead to deteriorating seller sentiment (which until now, appears to have held up remarkably well) ... and so the spiral begins.

There is more info on the JOE website than in the press release ... its not as bad as it originally sounded in the above release (more of a change in focus rather than an "exit" -- although clearly, lots of folks will be losing their jobs) ... here it is ...


Thursday, September 7, 2006


Jacksonville, Florida – (September 7, 2006) – The St. Joe Company (NYSE: JOE) announced today 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.
"During the past ten years we have seeded our key markets with financially successful, critically acclaimed places," said JOE chairman and CEO Peter S. Rummell. "Both JOE - and the markets where we do business - have matured to the point where it makes sense for us to further tighten our focus. We will focus those efforts where our competitive advantages are strongest and value creation potential is highest."
"Maximizing value for JOE means doing all the things it takes to move land to higher and better uses by preparing it to support inspirational places, towns, resorts and rural settings," said Rummell. "We are a 'town builder' not a 'home builder.' We want to use JOE's unique strengths to stimulate the creation of the infrastructure, workplaces, neighborhoods and environments that endow places with value, personality and purpose."
JOE will honor all its existing homebuilding contracts and new home warranties. "We are winding down our internal homebuilding operations, not walking away from our customers or commitments," said Rummell. "Moving forward, we will focus on what we do best: Creating great places."
"JOE's expanding relationships with local, regional and national homebuilders have made this move possible," said Rummell. "We had anticipated being able to make this strategic shift once we had proven the viability of our markets, particularly in Northwest Florida, and we are pleased this opportunity has come as quickly as it has."
Earlier this year, JOE announced a long-term relationship with Beazer Homes, USA (NYSE: BZH). Additionally, JOE's relationship with David Weekly Homes has expanded over the past year. Conversations with other homebuilders are ongoing. Nineteen local, regional and national homebuilders have submitted letters of interest to participate in JOE's RiverTown development south of Jacksonville.
Additional information regarding JOE's exit from Florida homebuilding can be found in an 8-K to be filed with the U.S. Securities and Exchange Commission today.

What this says to me is St. Joe doesn't want to build spec houses, and will hire contractors to build multi-family and facilities, which they have done often already.

As someone who has been associated with Arvida/St. Joe for some time, I am disappointed in this latest news, but I am far from shocked. They have been rearranging deck chairs on the Titantic for the past 3 years as it relates to their homebuilding efforts. Their management has turned over in this area on a yearly basis, their vendors and sub-contractors have been loyal, but not very aggressive in pricing due to the pain in the ass factor that was related to working for a company that failed to run their jobs in a manner that was conducive to scheduling, which is key for anyone in the construction industry. They were the golden child of the company for a while, because their profits appeared astronomical with their low basis in the land.
From day one I asked myself the question, why expose yourself to the liability and fluctuating costs of homebuilding when you have the golden goose.
Their focus is going to be one of Town Building which, other than the fiasco that is River Camps, is where their most profitible opportunity lies. I know that they have spent a ton on amenities and infrastructure, but their basis in raw land is pennies per acre, it allows them a great deal of latitude in spending money on building a town.
I wish all the people being laid off the best of luck, and hope they find other opportunities in this area. This may be a challenge due to the overall slow down in the area though.

What this says to me is St. Joe doesn't want to build spec houses, and will hire contractors to build multi-family and facilities, which they have done often already.

That is the way I read this as well. I agree with the other person that knows JOE well that they are just retrenching back into their "core" business and that is land/town development and not in building houses. No doubt JOE and many other development/builders (CENTEX, Ryland, others) are starting to rethink their development and building strategies if you read the papers.

What this says to me is St. Joe doesn't want to build spec houses, and will hire contractors to build multi-family and facilities, which they have done often already.

Exactly! St Joe does not need to build any more homes. Their work is some of the worst I have ever seen. The condo's in WC are already in dire need of paint and replacement of the trim. Look at the houses next to Publix that they are building..terrible craftsmanship. In my opinion it is a positive for the developments if they no longer build.

Shelly, you are a complete stock hound. No wonder you kept mixing real estate comparisons with Wall Street. This is your true passion. See if you can get Joe down to $10/ share, and I'll buy.

Exactly! St Joe does not need to build any more homes. Their work is some of the worst I have ever seen. The condo's in WC are already in dire need of paint and replacement of the trim. Look at the houses next to Publix that they are building..terrible craftsmanship. In my opinion it is a positive for the developments if they no longer build.

I must disagree with you Franny. We have a unit at WC and have found it to be very well built. As for the paint, how long does paint last down there?

I must disagree with you Franny. We have a unit at WC and have found it to be very well built. As for the paint, how long does paint last down there?

Not very long...we have to constantly paint anything outside.