The CEO of the country's largest home building company knows just how challenging the new-home market is today. "It's a day-by-day battle and a house-by-house battle on a subdivision-by-subdivision basis and a market-by-market basis," Don Tomnitz told analysts Tuesday during the company's second-quarter earnings conference call.

For the quarter, which ended March 31, Horton reported mixed results. Overall, the Fort Worth, Texas-based builder saw a $1.3 billion loss, which translates into $4.14 per diluted share. But the company also generated $1 billion in cash from operations in the quarter, a significant achievement given that one of the company's goals for 2008 was to generate $1 billion for the entire year.

What will D.R. Horton do with its extra cash? Stashing it. "We are focused right now on preserving our cash position and maintaining a lot of flexibility and liquidity," Stacey Dwyer, the company's executive vice president and treasurer, said during the call. "We have $585 million in senior notes that come due next January and February, so we are certainly going to be making sure we have adequate cash to retire those notes."

In terms of operations, Horton closed 6,719 homes last quarter, which is 31 percent fewer than 2007's second quarter. Those closings generated $1.6 billion in home building revenues, representing a 37 percent drop year-over-year. The company's cancellation rate improved, however, by 11 percentage points, to 33 percent for the quarter.

Like many builders, Horton wrote down assets this quarter, recording $834 million in impairments, 10 times what it wrote down in 2007's second quarter. As of March 31, it controlled 181,000 lots, 78 percent of which are owned. Company executives stated firmly during the call that they believe in writing down the value of Horton's land holdings versus selling lots at significant discounts.

"We're going to build through our existing land supply and lot supply as we've done," Tomnitz said. "To the extent that it needs impairments, we're going to impair it, and we're going to move through it. ... We get a better return on our money in the ground by building a home on it and selling it than by selling [that land] to an investor in a bulk sale."

Alison Rice is senior editor, online, for Builder magazine.

Learn more about markets featured in this article: Dallas, TX.