KB Homes quarterly profits: stuck in a cul-de-sac

On Friday, KB Homes (KBH), the country's third-largest home builder, reported a second-quarter net loss of $78.4 million, or $1.03 per share. While considerably less than last year's losses of $255.9 million, or $3.30 per share, this was still a devastating report. Most analysts had predicted that KB was on track to lose 63 cents per share. Last week, in fact, Goldman Sachs analysts Stuart Kaiser and John Marshall argued that KB was an "attractive" bet.

It isn't hard to see why KB is having a hard time. Even after cutting expenses by half, the company had a 40 percent drop in revenue. With a backlog of 3,804 homes, the company has estimated revenues of $796.9 million tied up in homes that aren't moving. Meanwhile, the average home price has dropped 4.6 percent to $216,200.