Feb. 14 (Bloomberg) -- Masco Corp., the maker of Behr paint and Delta faucets, posted its first loss in five years and is cutting about 8,000 jobs after a slump in the U.S. housing market. Masco also forecast 2007 profit lower than analysts anticipated.

The fourth-quarter loss was $187 million, or 49 cents a share, compared with net income of $173 million, or 41 cents, a year earlier. This year's per-share earnings might be $1.50 or less, Taylor, Michigan-based Masco today said. That compares with profit of $2.22 a share in 2006.

Masco will cut 16 percent of its workforce by the end of the first quarter, Chief Executive Officer Richard Manoogian said today on a conference call. Fewer purchases at Lowe's Cos. and Home Depot Inc. and the slowdown in new home construction, which accounts for 40 percent of Masco's sales, hurt revenue in the fourth quarter.

Severance costs will be ``significant,'' Manoogian said. He declined to give a figure for the charges, which were included in the company's forecast. Masco started cutting jobs, which will include 1,000 salaried positions, late last year, he said.

The stock fell 11 cents to $31.70 at 4:03 p.m. in New York Stock Exchange composite trading. The shares gained 3 percent in the past year.

Forecast

Masco said profit this year could be less than $1.50 or more than $1.80 a share, depending on new home construction, commodity prices and sales at home-improvement stores. The U.S. housing market fell 13 percent last year, the biggest decline since 1991.

``They're subordinating their own ability to execute to the broader market forces, which is not all that encouraging,'' Jim Dorment, an analyst at New York-based U.S. Trust Corp., said in an interview. They're saying there's too many variables, which ``shows their dependence'' on the market, said Dorment, whose firm manages $107 billion in assets including Masco.

The CEO warned in October that the U.S. housing market might not rebound until 2008. U.S. Federal Reserve Chairman Ben S. Bernanke, 53, said today housing weakness ``is likely to continue to weigh on economic growth over the next few quarters.''

Masco is expected to earn $1.99 this year, according to the average estimate of 12 estimates compiled by Bloomberg.

Sales in the first quarter will decline more than 10 percent, Manoogian said without being more specific. Sales for the year will drop in the ``mid-single digits'' on a percentage basis, he said. He didn't provide further details.

Lower Installation Revenue

Sales in the fourth quarter fell 5.8 percent to $2.95 billion, the first decline in at least nine years, because of the new home construction slowdown, which hurt revenue from cabinets and installation services the hardest. Cabinet sales dropped about 12 percent and installation services fell 9 percent.

The installation unit, which makes up a quarter of Masco's sales, does work in half of the new houses built in the U.S., adding insulation, garage doors and gutters.

Sales to key retailers dropped 7 percent in the quarter, continuing a yearlong slowdown. Manoogian, 70, said he expects sales at Home Depot and Lowe's, its biggest customers, to be unchanged this year.

Excluding one-time costs, including the writedown of assets, profit was 38 cents a share, one cent more than the average estimate of 12 analysts surveyed by Bloomberg.

Masco will raise prices this year to make up for higher raw- material costs such as brass and copper, Manoogian said. Material costs increased $600 million in the past three years, only $350 million of which the company could recoup by raising prices, he said. Masco employs more than 50,000 people worldwide.

To contact the reporter on this story: Mark Clothier in Atlanta at mclothier@bloomberg.net

Last Updated: February 14, 2007 16:05 EST