Just remember, if Toll is saying things are bad, things are 10x worse than what lies on the surface. Toll Rings Bells of Caution By Nicholas Yulico TheStreet.com Staff Reporter 2/22/2007 2:29 PM EST Updated from 12:27 p.m. EST http://www.thestreet.com/_dm/newsanalysis/businessnews/10340271.html Toll Brothers (TOL - Cramer's Take - Stockpickr) offered investors cautious comments about the state of the housing market, saying Thursday that it doesn't yet see an upturn and signaling that selling conditions have deteriorated somewhat in February. The outlook came as the luxury-home builder reported a 67% drop in fiscal first-quarter profits and lowered its full-year outlook amid continued weak housing sales. Shares of Toll recently were down 79 cents, or 2.4%, to $32.07. In a statement, CEO Robert Toll said there are too many soft markets to call a general upturn in the new home market. "Demand varies greatly from week to week in individual markets," he said. Bank of America analyst Daniel Oppenheim said he views Toll's comments as less positive than two weeks ago, when the builder reported its orders for the quarter and signaled an uptick in demand in January and early February. "We think this [less-positive commentary] is a reflection of choppy market conditions and the soft traffic at the start of the spring season, consistent with what we have seen in early results of our February Survey of Real Estate Agents," Oppenheim wrote in a research note Thursday. On the company's earnings conference call, Robert Toll addressed the fact that his comments in the release seemed to suggest that the market had gotten worse. "We were a little more disappointed than we were two weeks ago," Toll said on the call. Presidents Day's weekend had "good sales, but not anywhere near the bump that we'd typically see," Toll said. The weeks preceding and following Presidents Day weekend are the best periods of the year for the new home business, Toll explained. He also added that California is now a "B" or "B plus" market and not the "A" level of two weeks ago. For the quarter ended Jan. 31, Toll earned $54.3 million, or 33 cents a share, down from $163.9 million, or 98 cents per share, a year earlier. Analysts expected earnings of 29 cents a share, according to Thomson Financial. The earnings beat mostly stemmed from lower-than-expected land charges and higher margins, said Oppenheim. Land charges totaled $96.9 million, within the company's prior guidance of $60 million to $160 million. The charges relate to write-offs and writedowns of unprofitable land that Toll either owns or has options to buy. Excluding writedowns and the impairment charge, first-quarter earnings per share were down 27% to 72 cents. New home orders fell 33% to 1,027 units. The steepest drop came in the Western region of the U.S., where orders fell 65% from a year earlier amid particular weakness in Arizona, California, Colorado and Nevada.