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Friday, February 6, 2009

WEYERHAEUSER in Serious financial Doo Doo

Weyerhaeuser Co.'s (WY) fourth-quarter net loss ballooned amid $1.14 billion in goodwill write-downs and real-estate charges as sales and margins continue to slump for the forest-products company.

The prolonged housing slump, a plunge in demand for newsprint and rising costs of raw materials have pressured results in the industry and prompted downsizing.

The company, one of the nation's largest providers of lumber products, reported a net loss of $1.21 billion, or $5.73 a share, compared with a year- earlier net loss of $63 million, or 30 cents a share. Excluding items including the write-downs at its wood-products and cellulose-fibers businesses, the latest quarter's loss would have been 99 cents a share, compared with a prior-year profit of 42 cents.

Revenue slumped 30% to $1.76 billion for the company, which also supplies newsprint through its North Pacific Paper Corp. joint venture.

Analysts polled by Thomson Reuters projected a loss of 57 cents with revenue of $1.85 billion.

Gross margin dropped to 32% from 39.4% amid the sales woes.

Weyerhaeuser is continuing to shutter facilities as part of a cost-cutting effort that also entails a reduced dividend, wage freezes and halving capital spending this year. The company announced six months ago it would shed nearly 1, 500 job cuts, or 6.3% of its work force as it moves to focus on logging and home building.

Weyerhaeuser shares fell 6 cents premarket to $27.30, and there was no premarket trading. The stock has fallen nearly 55% since September.

Timber, pulp and wood products company Weyerhaeuser Co. said Thursday it is closing its veneer and lumber mills in Pine Hill, Ala. indefinitely, affecting 300 workers.

Weyerhaeuser (nyse: WY - news - people ), which will report its fourth-quarter results on Friday, said it will provide the mills' employees with transition benefits.

"The demand for residential wood products continues to erode," said Tom Gideon, executive vice president of forest products, in a statement. "Unfortunately, the current extraordinarily weak market conditions require that we take decisive action."

The plant closures are effective immediately, the company said. Weyerhaeuser continues to employ about 350 people in Alabama.

Shares closed earlier down 89 cents, or 3.2 percent, to $27.36.