Every now and then, I do make the right decision. Like getting out of the homebuilding industry. I learned a ton in my 7+ years working with big homebuilders, but I am so glad I got out of that industry. St. Joe (remember I used to do a ton of consulting work for Arvida/St. Joe Paper) is laying off 760 workers (80% of its staff) and the company I used to work for and say nice things about. (lets call them M HOMES) continues to layoff personnel. These companies found it so easy in an up market, but milked it for short-term gains and didn't really prepare themselves very well for a down market. Details on the St. Joe Company Layoffs are below. Update to this post M Homes saw this blog today (first person at 8:34 am via a propeller.com story) and it spread like wildfire. Obviously someone was upset, I had no less than 150 clicks to my network of sites in about 5 hours from M Homes. One would think in a market like this, and with troubles like that....they would have better things to do. If it wasn't for one person (and department) over there that I respect, I would be saying alot more about M Homes right now. So, hey to all of my old friends at M Homes. Hope all is well. Hope you enjoy the blog. I will be sure to not mention my old company here... :-). So if you aren't a friend, or one of my loyal blog readers...move on...nothing to see here.
The St. Joe Co. announced on Monday a major streamlining of its operations that will reduce its workforce by about 80 percent. But as the Jacksonville-based real estate developer transfers those operations to other companies, it expects many of those 760 workers to keep their jobs.
St. Joe's restructuring will shift the company away from being an "end-to-end developer" of its land holdings by transferring more of the development and management responsibilities to strategic business partners, Chairman and Chief Executive Peter Rummell said in a conference call with analysts. "We think these are the logical next steps in the evolution of the St. Joe Co. in Florida," he said. "We are repositioning Joe from an end-to-end developer to, in essence, an asset manager, to Northwest Florida's primary supplier of entitled land and a sophisticated development partner," Rummell said.
St. Joe has been developing residential communities on land it owns mainly in the Florida Panhandle for the last decade. It continues to own and operate properties such as the beachfront WaterColor Inn resort in Walton County and six golf courses. Under the restructuring, St. Joe plans to continue owning the hospitality and recreational properties but transfer the day-to-day operations to third-party management companies. It expects the 500 employees affected by the transfers, who are mainly located in the Panhandle, to continue in their jobs with the new companies. Rummell said the company is close to signing agreements for the WaterColor Inn and the golf assets and expects to announce them later this week.
St. Joe also said an additional 260 positions, mainly in project development and related support, will be eliminated or transferred to strategic partners by the end of 2008. The company did not give specific information on where those positions are located. The company had 938 full-time employees as of Feb. 1, according to its annual report. That was down from 1,230 at the end of 2005, as the company began restructuring its operations in 2006, including eliminating its home-building business. "We recognize that the changes we are implementing will affect the lives of numerous people and families," Rummell said, but he said the moves "are the right thing to do for the company."
Besides those cost-cutting moves, St. Joe also announced several other initiatives Monday to improve its financial performance, including the elimination of its quarterly dividend payments of 16 cents a share. It will also sell off certain "non-core" assets such as 100,000 acres of rural property, 1,200 developed home sites and about 190 homes. "We believe Joe will benefit from a stronger balance sheet and, over time, a significant increase in financial flexibility," Rummell said.
St. Joe expects to generate annual cost savings of $20 million a year by 2010 from the restructuring. Wachovia Securities analyst Christopher Haley said in a research note that the dividend elimination is a good move for St. Joe. "Few, if any, own Joe for the dividend," he said. St. Joe said it expects to increase value for stockholders by repurchasing shares in the marketplace. In response to analysts' questions about the current slump in the real estate market, Rummell said the asset sales won't be a "fire sale.""We are not dumping stuff on the market and we are not going to make stupid decisions," he said. Rummell also said the restructuring of its operations is not a response to the weak market. "I'm sure there's some people who won't believe it. But I am here to tell you that we would be doing this whether the market was good or bad," he said.
With the restructuring, St. Joe is putting most of its focus on high-growth assets it owns, which are mainly in Walton, Bay and Gulf counties in the Panhandle. But the company has one major project in the Jacksonville area, the 4,170-acre RiverTown residential community along the St. Johns River in northern St. Johns County. Construction has begun in RiverTown and the first residents are expected in 2008. St. Joe spokesman Jerry Ray said Monday the company's restructuring won't affect RiverTown's development. (From Jacksonville Times Union)