LENNAR CEO STUART MILLER: 'It doesn't feel like we can identify a bottoming yet. [The downturn in the housing market] happened very quickly, very suddenly.'

The poem -- about a hen that labors to find worms in tough times -- is something of a rite of passage at Lennar, the third-largest home builder in the country. Since 1994, some 4,000 employees have recited the poem to the applause of their peers, with the name, date and place of each performance memorialized on large plaques outside Miller's office.

But these days, the poem is taking on a whole new significance. After a housing boom of more than a decade, the long-awaited downturn has finally hit with a speed and force few anticipated. Home-builder confidence has dropped to its lowest in 15 years. Cancellations are up. And new construction is down to a level not seen in three years.

Perhaps worst of all, it's hard to tell when things will get better.

''It doesn't feel like we can identify a bottoming yet,'' said Miller, who recently downgraded Lennar's earnings estimates for the year. ``It happened very quickly, very suddenly. I can't identify the trigger.''

Or put in the words of The Little Red Hen: ``What's become of all those fat ones is a mystery to me; There were thousands through the rainy spell, but now where could they be?''

A GIANT OF A COMPANY

Despite its scrappy, diminutive mascot, there's nothing little about Lennar. Last year the home builder brought in $13.9 billion in revenue, making it Miami-Dade's biggest company. It also ranks among the top 500 in the world.

Headquartered in nondescript offices in western Miami-Dade County, the company has dabbled in condominiums but largely builds single-family homes across the country. Its areas of concentration are Florida, Texas and California.

The company is known not only for its quirky corporate culture but also for its explosive growth. Over the past decade, Lennar has aggressively bought competitors and moved into new markets, taking its profits from $88 million in 1996 to $1.4 billion last year.

FRENZY ENDS

But now, the real estate frenzy that propelled Lennar's growth has cooled. Skittish investors have battered home builder stocks, with Lennar trading in the mid-$40s, after going as high as $66 per share in the past year.

St. Joe Co. of Jacksonville, the largest private landowner in Florida, announced recently it is fleeing the home-building business and cutting 11 percent of its workforce. Home builders WCI Communities in Bonita Springs and Technical Olympic USA in Hollywood are also trimming workers.

''It is clear that many of our housing markets are in a difficult transition to more sustainable levels of activity,'' Antonio Mon, Technical Olympic USA's CEO, said in August. He added that he did not know how long the ''transition'' would last.

Lennar has stopped hiring, and in recent months outlined its way forward in the uncertain market. The aim is to position itself for growth when the market picks up, but the strategy has drawn some criticism.

This month three stock analysts downgraded Lennar's stock -- two from buy to hold and one from hold to sell. Bank of America analyst Daniel Oppenheim cautioned that a record number of homes on the market for sale coupled with overbuilding will result in ''sharply lower margins'' in the next two years for Lennar.

Lennar's response: Keep building.

Miller plans to ''keep the conveyor belt running'' and finish building new homes in projects already underway. He also plans to offer sales incentives and slash prices to get the homes sold.

It's an approach shared by several home builders, such as Centex in Dallas and D.R. Horton in Fort Worth. Others, such as Pulte Homes in Michigan and KB Homes in Los Angeles, have taken a different tack. These builders are scaling back production but holding firm on prices until buyers return -- a strategy some have called quality over quantity.

However, the pressure is on. KB Homes chief executive Bruce Karatz said Thursday price concessions and incentives by other builders have ``required us to do the same in some cases.''

For Lennar, Miller says he'd rather have cash now -- even if there's less of it -- than sit on a house and hope it'll sell for a better price down the road.

''With liquidity we live to see another day,'' said Miller.

Of course, that strategy also eats away at profits.

Lennar has ''decided to continue producing whether there is a buyer or not,'' wrote Stephen East, analyst with Susquehanna Financial, in a September report. ``Unless the market does an about-face, we know the impact to margins for the next several quarters will be detrimental. We prefer build to order, not build to a schedule.''

Another aspect of Lennar's strategy: While other builders may go through with contracts to buy prized parcels of land, Lennar is demanding lower prices or walking away. In some cases, that means walking away from multi-million-dollar down payments.

''When the market turns downward, opportunities present themselves,'' Miller said. ``It is not that you make more money while the market moves down, but hopefully you are able to do some things to prepare for the next upward swing.''

Veteran real estate analyst Lew Goodkin thinks Lennar's strategy is sensible because the downturn may be an extended one. If that's the case, builders who sell now will have more cash on hand, rather than empty homes and lots waiting for sale.

Goodkin also applauds Lennar's aggressive renegotiations over land deals -- and its willingness to walk away.

''So many greatly resist walking away from money, only to take even bigger losses later,'' Goodkin said.

WHAT'S IN A NAME?

Lennar was founded in 1954 by Leonard Miller, Stuart's father, and Arnold Rosen -- thus forming Lenn-ar.

Under Leonard Miller the company was a smaller, more conservative operation. After Stuart became CEO in 1997, the company took off along with the real estate boom.

It was also Stuart who crafted the Lennar culture, made up of common rituals and references that aim to bind employees to each other and the company.

A television network communicates the Lennar Way across the company's various offices. Employees wear outsized name badges with no titles so everyone refers to each other by name -- an idea Miller picked up after visiting Disney World. And workers are encouraged to read Dr. Seuss' Oh, the Places You'll Go and Yertle the Turtle, children's books with fables about potential and power.

Miller, 49, has even authored his own versions: Where's the Wow? and Where's the How? by an author called ''Dr. Steuss,'' a combination of Stuart and Seuss. The books come complete with peel-and-stick labels.

Then, of course, there is the moment when an associate -- and Lennar insists on that term -- recites Scratchings From The Little Red Hen in the office lobby on Fridays. The audience chants encouragement, shouting ''Bring it home!'' Many Fridays, employees also gather to listen to the song Trashin' the Camp from Tarzan.

''People may say it is childlike, more like Romper Room than the boardroom. But it builds comraderie and kinship,'' said Miller.

He turns serious, in what is perhaps both a sign of the times and an emphasis on the reason behind the rituals.

''Make no mistake, this is an intensely corporate environment,'' said Miller, who noted that sales and work are monitored daily. ``We run a rigorous day-to-day program.''

The company has morning and evening meetings where it goes over everything from sales and cancellations to progress on work sites. Big screens in Miller's office and in the conference rooms display the real-time stock tickers of Lennar and all its competitors to remind employees of how the company is doing on Wall Street.

Miller, a graduate of Harvard and the University of Miami's law school, has worked at Lennar his entire professional life. In 2005, he made $31.9 million in salary and bonus.

Despite the almost hokey comraderie he has brought to the company, he is known as a stickler for detail and discipline. He also prides himself on being an everyday sort of guy, who walks around and talks to everyone from the cleaners to the latest employees fresh out of business school.

UNCERTAIN TIMETABLE

The biggest question now facing Lennar under Miller's leadership is how long and deep the downturn will run. Miller said he's convinced the market will come back -- spurred by growing population, among other factors -- but he can't guess when.

Previous downturns have proven difficult for many home builders to navigate. In the early 1990s, the last major industry downturn, about 15 percent of the country's 385,000 residential builders went bankrupt, the National Association of Home Builders estimates.

''The market is still a little elusive right now,'' said Miller. ``We will probably find opportunities when we understand market conditions a little bit better. But right at that point when people like you want to know most, we won't tell you.''

For now, Miller and associates are forging ahead with the strategy of taking lesser profits now rather than waiting for the market to come back to them. As the closing lines of the Little Red Hen put it:

``[Others] cannot do much business now,

because of poor conditions.

But as soon as things get right again,

they'll send a hundred firms --

Meanwhile, the little red hens are out,

a-gobbling up the worms.''