Weyerhaeuser is all about growing the trees. Take a look at the words on its Web site: "Weyerhaeuser releases the potential in trees to solve important problems for people and the planet. ... We are inspired by trees. Their strength, vitality, and unlimited potential to be transformed into useful products have guided our approach to business for more than a century."

TAKING ROOT: After announcing a $148 million first quarter loss, Weyerhaeuser discussed a return to its core wood business. Shown here, Douglas fir seedlings growing in a Weyerhaeuser nursery located near Little Rock, Wash. Photo: Getty Images Listen to the words of the company's new CEO Daniel S. Fulton during a May 2 earnings call: "We see our tree land as core."

So it should come as no surprise that the company, under the stress of a market that is hitting both its core wood products business as well as its ancillary home building business hard, is talking about going back to its–pardon the pun–roots.

Weyerhaeuser lost $148 million in its first quarter–$0.70 per diluted share–much of which was related to impairments of its real estate holdings as well as the costs of shutting down some of its wood products capacity. Conspicuously, management made no specific mention of impairments related to LandSource, the California-based land development company Weyerhaeuser invested in with McFarlane Partners over a year ago, which appears to be on the verge of bankruptcy.

One bright spot in the earnings report was the $721 million gained by selling off its fine paper business. Another infusion of cash is expected to come from selling its containerboard packaging and recycling assets in the third quarter.

More divestures are being considered. "It will take unprecedented action on our part to deal with these operating conditions," Fulton said during the May 2 conference call. Restructuring is in order, he added. "We continue to examine our non-timberland assets and strategies for their long-term value and fit."

Could the company's home building companies be next on the chopping block?

As with other home builders, there was little to no good news to report from Weyerhaeuser's building companies last quarter.

"The spring selling season has not materialized," said Larry Burrows, the recently named CEO of Weyerhaeuser Real Estate Co. "Excess inventories of new and existing homes plague markets."

Burrows said Las Vegas, Phoenix, and California's Inland Empire are the company's weakest markets. San Diego has improved a bit, but sales remain "far from brisk." And in Washington, D.C., sales are "below trend." In response, the company is buying less land and concentrating on moving inventory, reducing staff, and selling smaller, less expensive homes.

"Today's results are sobering, but we have weathered similar business cycles before," Fulton said.