The problem for WCI revolves around a decline of sales in its luxury condominium units.
"WCI reported
that it took only eight gross orders in its tower segment during the third
quarter and that 89 customers defaulted on previously signed sales contracts," S&P analyst James Fielding said in a statement.
Those defaults translate into the company taking a loss of $89 million that it previously recognized as revenue under the percentage of completion
method of accounting. Add to this the overall sluggish sales of homes in general and WCI recorded a pretax loss of $115 million for the third quarter.
Not even corporate raider Carl Icahn has been able to change the direction of WCI. Earlier this month, Icahn reported the first quarterly loss in his three-year-old hedge fund, Icahn Capital Management LP, because of big bets on WCI and Lear Corp. — Gerald Magpily
See Dealscape: Levitt unit falls like house of cards
See Dealscape: Ichan's funds post first loss
See TheDeal.com: Levittown creator goes bankupt
See S&P press release (subscription required)
