The Countrywide Conundrum

I was initially going to refrain from even touching on Countrywide's (CFC) earnings (and planned three-hour conference call -- really, Angelo, is that necessary?), but I had to get a perverse laugh out of the fact that CFC posted a $1.2 BILLION loss for the quarter and the stock soared 30%.

Countrywide's Colossal Writeoff

Countrywide (CFC) finally confessed the amount of its expected restructuring from layoffs and consolidations. In an amended 8-K filed this afternoon, Countrywide said that

The Company...estimates that it will incur a pre-tax restructuring charge of approximately $125 million to $150 million, consisting of approximately $30 million to $35 million in one-time termination benefits, $73 million to $89 million in lease termination costs and $22 million to $26 million in fixed asset disposals and other miscellaneous costs. Of the total amount of the pre-tax restructuring charge, approximately $57 million is expected to be recognized in the quarter ending September 30, 2007, with the remaining amount expected to be recognized primarily in the following quarter. Additionally, the Company estimates that of the total amount of the pre-tax restructuring charge approximately $65 million to $90 million will result in future cash outlays.

The $57 million hit represents about 12% of Countrywide's second-quarter earnings and will likely push CFC well into the red for the third quarter. Countrywide reports Q3 earnings on October 26.