Pulte Homes booked a $696 million loss--or $2.75 per share--for its first quarter of 2008, 95% of which was related to land. Total inventory impairments and other land-related charges totaled $663.6 million.

"The first quarter may be described for Pulte as making the best of a bad situation," CEO Richard Dugas said during the earnings release conference call on the morning of April 24. "High supply and weak demand do not make for a very pretty picture in any industry."

Dugas downplayed the land-related charges and focused instead on the company's operational performance. "While we are disappointed with the sizeable land charges, operating performance was very respectable and we are very proud in many respects," he said.

While other builders have chosen to liquidate land in bulk to generate cash, Pulte has chosen a different tactic. After ridding itself of its least desirable land positions, it has decided to hold onto almost all the land it has now, mothballing projects that haven't been started.

Dugas said Pulte, with more than $1 billion in cash in the bank, no balance on its revolver loan, and a relatively low debt load, can afford to do that. "We like our land positions," he said.

Plus, executives said, Pulte has chosen to focus on bringing in cash by improving operations, reducing inventory, limiting future land investments, and selling lots and land on a local basis as warranted, which it said brings better prices than bulk sales.

As examples of improved operations, Dugas offered that the company managed to reduce its SG&A expenses by 28%, or $79.7 million, compared with the same quarter in 2007 and that it has redueced its speculative inventory and number of controlled lots.

That said, Pulte executives said they don't see signs of stabilization of the market yet, and the backlog numbers show why. At the end of its first quarter this year, Pulte had 8,559 homes in backlog--a year-over-year decline of nearly 36%. It sold 4,733 homes compared to 5,420 in the same quarter of the previous year.

The company offered guidance for the current quarter, predicting losses will be between $0.10 and $0.20 per share unless the company receives a tax refund or there are any additional impairments and land-related charges.

As has been the case throughout the downturn, Pulte's active adult Del Webb product sales have held up better than its other developments. Dugas said that's because active adult buyers, like other buyers, may have issues with selling their homes, but they don't seem to be as worried about home prices falling further after they buy.

Dugas said he is lobbying for several Congressional measures that he thinks would help the home building industry. Chief among them is offering home buyers a temporary tax credit of between $10,000 and $15,000.

"The one thing that would be the direct shot into the vein of housing would be this tax credit idea," Dugas said.

Other measures would be to make the higher limit for FHA loans permanent and allowing builders to carry back operating losses for more than two years.

Pulte executives said they see potential opportunity, rather than fear of a market glut, as banks foreclose on land in the portfolios of builders in deep financial trouble.

They said banks may be willing to provide the working capital to develop and sell the land, hiring Pulte to handle the construction. "Quite frankly, we could be in a position to pick up lots on a rolling basis," Dugas said. "We stay tuned to that very closely. ...There may be opportunities in managing the real estate that does come back."