Taking Multiple Cuts At Plum Creek

These are strange times for companies trying to operate in the timberland industry. Although timberland theoretically offers the advantage of allowing companies to sit tight and literally let their assets grow, the reality for public companies is the expectation of ongoing dividend payments and growth that necessitates active management. As one of the go-to names in the timber business, Plum Creek (NYSE:PCL) is a mixed bag of good and bad news for investors today.

The Quarter That Was
Expectations were not all that high for the third quarter, but Plum Creek disappointed nevertheless. Performance in the actual timber business was not too bad - sawlog prices were higher than in the year-ago period, although still not at a level that is all that attractive. Due in part to uninspiring market conditions, then, Plum Creek has pulled back on its harvest levels.

The bigger issue, though, was in the real estate business. Not surprisingly, demand for land for housing remains weak and revenue and operating profits tied to real estate sales have dropped precipitously, draining away a high-margin source of business. Due in part to the ongoing slump in real estate, Plum Creek took down numbers for the fourth quarter. 


Please see the link below for the full piece on PCL:
http://stocks.investopedia.com/stock-analysis/2010/Taking-Multiple-Cuts-At-Plum-Creek-PCL-RYN-WY-DEL-PCH-IP1027.aspx